What drove UAL's strong Q4 2024 earnings beat?

United Airlines (UAL) reported strong Q4 2024 earnings, with an EPS of $2.95 and total revenue of $14.7 billion, surpassing market expectations. The key factors contributing to UAL's robust performance include:

1. Revenue Growth: UAL's total revenue increased by 2.5% year-over-year to $14.8 billion, driven by a 1.6% rise in passenger revenues, which accounted for 91.3% of the top line. This growth was fueled by strong demand for United's products, with corporate revenues up 13% in September compared to the previous year, and premium revenues increasing by 5% year-over-year.
2. Operational Efficiency: The airline's operational efficiency improved significantly, with consolidated TRASM (Traffic Compensated Revenue per Available Seat Mile) declining by only 1.6%, indicating better yield management. This was a result of United's strategic decisions to optimize its capacity and focus on profitability, even in the face of industry capacity challenges.
3. Cost Management: UAL managed to keep costs under control, particularly fuel costs, which fell by 13.2% to $2.56 per gallon. This reduction in fuel expenses contributed positively to the airline's bottom line.
4. Strategic Capacity Management: United's decision to expand capacity more slowly than competitors, anticipating an industry inflection point, paid off handsomely. By reducing unprofitable capacity and focusing on high-demand routes, UAL was able to maximize its revenue potential.
5. Share Buyback Program: UAL announced a $1.5 billion share repurchase program, reflecting confidence in its financial performance and commitment to returning value to shareholders. This move also boosted investor confidence and positively influenced the stock's performance.

In summary, UAL's strong Q4 2024 earnings beat was driven by a combination of revenue growth, operational efficiency, cost management, strategic capacity management, and a shareholder-friendly move in the form of a share buyback program.