United Airlines said on Friday that parent UAL Corp will pay shareholders $2.15 per share in a special payout totaling $250 million, marking a rare move by an airline to reward investors.
The U.S. airline industry is still recovering from a five-year slump in which it racked up $35 billion in losses. During that time, several airlines went into bankruptcy, including United, wiping out shareholders' investments.
UAL's move is a sign of the industry's financial recovery as well as the pressure faced by airline managers to reward investors. The payout could put pressure on other carriers in the highly competitive industry to follow suit.
This shareholder distribution underscores our commitment to creating value for our investors, UAL CEO Glenn Tilton said in a statement. We compete for shareholders just as we compete for customers.
The special cash distribution was made possible after United's lenders approved an amendment to the company's credit agreement. Under the amendment, the company said it can undertake an additional $250 million in shareholder initiatives without any additional prepayment.
United also said that it can carry out further shareholder actions, which could also include stock buybacks, in an amount equal to future term loan prepayments.
United Airlines said it paid down $500 million of a term loan under its existing credit agreement.
The special payout, which is equivalent to about 5.3 percent of UAL's closing stock price on Thursday, will be made on January 23 to holders of UAL Corp stock on Jan 9.
(Reporting by Chris Reiter; Editing by Dave Zimmerman)