Tuesday, April 18, 2017

United, Facing Uproar Over Passenger Treatment, Says Earnings Beat Expectations: Third-largest U.S. airline by traffic says increased fuel costs cut into its latest quarterly profit



The Wall Street Journal
By Susan Carey and  Ezequiel Minaya
Updated April 18, 2017 3:45 a.m. ET


United Continental Holdings Inc., navigating a turbulent week a since a passenger was dragged off one of its regional flights, reported strong first-quarter profit in the three months before the incident.

The nation’s third-largest airline by traffic beat analyst expectations for the fifth consecutive quarter even as profit fell from the same period a year ago on higher fuel costs. United raised its forecast for unit revenue growth between April and June to between 1% and 3% year-over year, an improvement from the first quarter when it was flat. Unit revenue measures the amount taken in for each passenger flown a mile. The industry has been struggling for two years to reverse declines in that important metric.

United’s President Scott Kirby said that if the forecast bears out it would be the first period of positive unit revenue growth in two years, despite the April 9 altercation at Chicago’s O’Hare International Airport.

Chief Executive Oscar Munoz said the incident on Flight 3411 “has been a humbling experience, and I take full responsibility.” He said United needs to do more for its customers, and the incident “will prove to be a watershed moment for our company.”

Mr. Munoz has pledged a thorough review of the company’s policies and training by the end of the month. United already made some policy changes after videos of Dr. David Dao being dragged off Flight 3411 went viral last week.

Mr. Munoz and other executives will host a conference call Tuesday morning with analysts and reporters. They are expected to face questions over the treatment of Dr. Dao, the carrier’s flat-footed initial reaction and whether the company can see any sign of lower bookings from dissatisfied fliers as it heads into the crucial summer travel season.

Chicago-based United said it earned $96 million, or 31 cents a share, in the first quarter, a decline from $313 million, or 88 cents a share, a year ago. The decline was blamed on higher fuel expense—up 28% from a year ago—and the effect of new labor contracts approved in 2016.

Revenue was in line with expectations, at $8.4 billion, an increase of 2.7% from a year earlier. In the first quarter, traffic rose 2.2% on a 2.6% increase in capacity.

Excluding one-time items, United earned $129 million, or 41 cents a share, better than the consensus among analysts, who had the company delivering $116 million excluding items. Among the special items were $21 million in severance and benefit costs for about 1,000 mechanics who agreed to voluntarily separate from the airline through early 2019.

United shares rose nearly 2.5% Monday to close at $70.77, and edged up after hours to $71.25.

Original article can be found here:  https://www.wsj.com

5 comments:

Anonymous said...

I have little sympathy for Dr. Dao. Had I been a passenger on the flight I would have vacated my seat when asked to get off.

Anonymous said...

It is easy to say that, but when it actually happens to you, it may not be so easy after all. The bottom line is that as a paying passenger of the airline, you do have some rights. If you don't exercise them, don't expect the airline industry to preserve them for you. After all, airlines are there to make money, not to give angel flights to their passengers. That is why passengers should fight for fair treatment from the airlines, and when they do not receive fair treatment, the best decision might be to not to do business with the offending airline again. In other words, vote for change with your money by spending it with the best airlines. And finally, reach out to your elected officials and/or the FAA if you want to see changes made to the system.

Anonymous said...

The China backlash is hypocritical. In China that doctor would have been executed already for the illegal dispensing of prescription drugs that got his medical license suspended twice already.

Jim B said...


Every passenger has their price. For that matter I admittedly am relatively cheap.

United managers could have used their business sense and avoided many millions in losses (this next and subsequent quarters) if they had simply kept upping the compensation to address their own sick policy of overbooking all the time.

Frankly, the airlines [all of them] are intrusive, uncomfortable, confusing, and deliberately make buying an economical ticket a 2 hour waste of time on the internet and phone when it should take 15 minutes at best.

I run a small aero corporation. If I want to have the highest profits then this means investing the least amount of money in safety and customer satisfaction. We want our customers safe and happy so we make less in profits.

United, I think a lot of people are done with you because of raw arrogance.

To the rest of you who comment, do not demonize the passenger. Those ankles being dragged may be yours next time.





Anonymous said...

Romans 13
Obey Those in Authority

All of you must obey those who rule over you. There are no authorities except the ones God has chosen. Those who now rule have been chosen by God.

So whoever opposes the authorities opposes leaders whom God has appointed. Those who do that will be judged.

If you do what is right, you won’t need to be afraid of your rulers. But watch out if you do what is wrong! You don’t want to be afraid of those in authority, do you? Then do what is right, and you will be praised.

The one in authority serves God for your good. But if you do wrong, watch out! Rulers don’t carry a sword for no reason at all. They serve God. And God is carrying out his anger through them. The ruler punishes anyone who does wrong.

You must obey the authorities. Then you will not be punished. You must also obey them because you know it is right.

Do you owe respect? Then give it. Do you owe honor? Then show it.