This year has continued the gains in the airline industry with strong performances from American Airlines Group (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL). While United Continental Holdings (NASDAQ:UAL) has not gained as much, it has still added another 33% to the holdings of investors from the beginning of the year.

So how has United Continental grown the fortunes of investors this year and can it continue doing so for investors?

Clear weather lifts all planes
For the past couple years, the airline industry has been booming thanks to growing air travel demand and disciplined capacity management. This has led to record profits and the available funds for things like debt reduction, fleet modernization, and returns of capital to shareholders.

source: By Frank Kovalchek from Anchorage, Alaska, USA [CC-BY-2.0 (], via Wikimedia Commons

As the story of the airline industry has turned positive, investors have been buying a broad array of airline stocks looking to capture the upside of the industry. Despite United Continental having lower operating margins than its top rivals, investors have pushed the stock higher as these margins improve alongside the healthier industry.

Share buybacks
Delta Air Lines was the first among the major legacy carriers to launch a share buyback. In 2013, the share buyback was launched with a $500 million authorization, but this was expanded to $2 billion this year.

In July, American Airlines Group and United Continental launched share buybacks of their own. While American Airlines' announcement came with a dividend, United Continental's did not, but impressed investors nonetheless.

The airline launched a $1 billion share buyback that is expected to be completed over the next three years. By doing this United signaled to its shareholders that it has confidence in its financial future and that it sees its shares as undervalued.

Additionally, the buyback shows that management is interested in shareholder-friendly initiatives, raising the possibility of a dividend being initiated in the future.

Beating earnings

source:By B777,_B474,_and_A319's_at_SFO_International.jpg: Jun Seita derivative work: Altair78 [CC-BY-2.0 (], via Wikimedia Commons

On Wall Street, earnings reports can make or break an investment. So it should be no surprise that United Continental investors are doing well after the airline beat earnings for the last three reports in a row.

Seeing as United Continental has lagged peers for the past year, these earnings beats give hope to investors that the airline may be catching up to rivals.

Analyst upgrades
As United Continental has posted strong earnings, analysts have turned more positive on the stock. Two such analysts, Julie Yates and Krishna Vege from Credit Suisse, have named United Continental as their top pick, citing undervaluation compared to peers.

It should be noted that many analysts remain bullish on the airline industry as a whole with American Airlines Group and Delta Air Lines also receiving outperform ratings from most analysts.

So United Continental's good position with analysts is not unique, but the airline industry as a whole, United included, has been helped higher by these positive analyst comments.

Outperforming the market, underperforming peers
United Continental shares have been good to investors who have held them this year, but those same investors could have done even better with American Airlines Group or Delta Air Lines shares.

At this point, I prefer and own shares of the latter two companies, but United Continental could appeal to investors willing to assume some more risk and bet on a catch-up to industry averages.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.