United Airlines Sees Blowback Over $1.5 Billion Stock Buyback Plan

NEWARK, NJ — United Airline’s plan to buy back $1.5 billion of its stock – the first time the company will be allowed to do so since the coronavirus pandemic – is drawing criticism from unionized flight attendants, who are decrying the plan as a “sickness that hurts workers and consumers alike.”

United, which is based in Chicago and operates a hub at Newark Airport in New Jersey, announced plans for the buyback on Tuesday.

Companies usually buy back shares of their stock to increase the value of the remaining shares by reducing the supply of them. Other reasons for buybacks include preventing a major shareholder from assuming a controlling stake in the business.

The airline industry received tens of billions in federal aid from the 2020 CARES Act. One condition of the aid was an agreement to not buy back stock or pay dividends for one year beyond the terms of the loans – but that stipulation has now ended.

According to United, the company's board of directors authorized a new share repurchase program for up to $1.5 billion of outstanding shares of common stock and warrants originally issued to the U.S. Treasury under the CARES Act and Payroll Support Program, subject to a limit of $500 million in aggregate through year-end 2024. This amount represents approximately 7 percent of the company's market capitalization based on the closing stock price on Oct 14.

“In the last four years, we've invested $22 billion in our product and nearly $10 billion in our people,” United Airlines CFO Michael Leskinen said.

“We're now in a position to add a share repurchase program as we continue to invest in and deleverage our business,” Leskinen added. “We intend this buyback to be the beginning of a consistent and disciplined return of capital that is paced by our ability to generate increasing levels of free cash.”

The plan has caught the ire of the Association of Flight Attendants-CWA (AFA), which has been entrenched in a long-running labor standoff with United over a new work contract. See Related: United Flight Attendants Move Forward With Potential Nationwide Strike

“United Airlines management just made a huge mistake,” union spokespeople said in the wake of the company’s announcement.

“Stock buybacks are a sickness that hurts workers and consumers alike,” their statement continued. “The airline industry was rid of them, but a greedhead hedge fund broke the seal in its efforts to gain control of Southwest Airlines and now United Airlines management is following their lead to manipulate the stock and cheat workers and passengers.”

“That money United just promised Wall Street belongs to flight attendants who worked throughout the pandemic and during this taxing recovery for all of us on the front-lines,” the union insisted. “United management could end the games and agree to the contract flight attendants have earned tomorrow. But instead, they are choosing to jump back in the greed pool with this century’s robber barons.”

• See Related: COVID Bailout Is For People, Not Stocks, NJ Congressman Tells United
• See Related: United Airlines May Lay Off 36K Despite $5 Billion In Federal Aid
• See Related: 27 Congress Members Tell United Airlines: ‘Don’t Cut 2,500 Jobs’

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