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Two big U.S. airlines on Thursday boosted their share buyback programs and said demand remained solid, though fares continue to fall because of fierce domestic competition and currency headwinds.

United Continental Holdings Inc. and Southwest Airlines Co. both reported record fourth-quarter profits bolstered by falling fuel prices. The carriers also plan to add larger aircraft to lower their costs and tackle the twin challenges of fast-growing discount rivals and pricier new labor deals.

Oscar Munoz, United's chief executive, said he was committed to returning more capital to shareholders as he made a surprise appearance on the airline's quarterly earnings call. Mr. Munoz had a heart transplant on Jan. 6 and said he expected to return to work before the end of the first quarter.

Investors have hammered U.S. airline stocks this year, concerned that slowing global economic growth will dent demand and accelerate a yearlong slide in average fares, prompting executives to boost their buybacks.

United, the third-largest U.S. airline by traffic, said it plans to repurchase $750 million in shares during the first quarter, having bought back $1.2 billion during 2015. Southwest said it would buy back an additional $500 million starting in the quarter.

The moves reflect executives' confidence in overall demand, though pockets of weakness remain, notably in routes to Latin America and among corporate customers tied to the energy sector.

United said energy-related business dropped 40% in the fourth quarter from a year earlier, and is moving capacity from its big Houston hub to Denver and San Francisco, its main base for flights to Asia. The airline said demand on its services to China, where's it's the market leader, remained robust.

The airline said it was ordering 40 Boeing Co. 737-700 jets to replace smaller regional planes. United evaluated jets from Airbus Group SE, Bombardier Inc. and Embraer SA, though the company expects to review bids from all four manufacturers for a follow-on order.

Mr. Munoz has sought to repair some of United's fractious labor relations, and its pilots are due to announce on Friday whether they have accepted a proposed contract, with mechanics also reviewing a planned new pact. United said, if accepted, the two plans would raise unit costs by 2.5% this year compared with 2015. The airline has yet to secure a new deal with its flight attendants, who staged protests on Thursday about the lack of progress.

United reported a fourth-quarter profit of $823 million compared with $28 million a year earlier, with per-share earnings rising to $2.24 from 7 cents, just shy of analysts' expectations. Revenue fell 3% to $9.04 billion.

The airline said its closely watched average passenger revenue is expected to fall six percentage points to 8% in the first quarter, and it has trimmed planned capacity additions to help bolster fares.

Southwest, a bellwether for the domestic market, said it expected its average passenger revenue to stabilize in the quarter. The airline said it was converting 25 of its Boeing orders to the larger 737-800 model.

The airline reported a profit of $536 million for the fourth quarter compared with $190 million a year earlier, with per-share earnings rising to 82 cents from 28 cents. Revenue climbed 7.5% to $4.98 billion.

United shares, which have slid about 20% this year, were recently up 1.1% at $45.63 after reversing an early decline. Southwest's stock was up 2.2% at $40.16.

Anne Steele contributed to this article.

(END) Dow Jones Newswires

January 21, 2016 13:25 ET (18:25 GMT)

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