UNITED PROFIT FALLS, SHARES RALLY
CEO Munoz issues another apology
DALLAS — United Airlines’ profit plunged 69 percent in the first three months of the year, and that was before the terrible publicity surrounding the dragging of a bloodied passenger off a plane.
The cost of fuel, labor and maintenance all rose sharply in the first quarter, helping push United’s profit down to $ 96 million, despite higher revenue.
The results released Monday beat Wall Street expectations, however. United performed better by other measures — more cancellation-free days, fewer lost bags.
The power to raise prices was also swinging United’s way. A key revenueper- mile figure was flat, adding to evidence that a two- year decline in average fares is over. United expects the revenue- per- mile figure to rise by 1 to 3 percent in the second quarter.
It is unclear whether last week’s incident in which Chicago airport officers dragged a 69- year- old man off a United Express plane will halt United’s progress.
CEO Oscar Munoz issued another apology Monday.
“It is obvious from recent experiences that we need to do a much better job serving our customers,” Munoz said in a statement. He said the company is “dedicated to setting the standard for customer service among U. S. airlines.” While the April 9 United Express Flight 3411 made headlines last week, it has had little effect on United’s stock. United Continental Holdings Inc. fell about the same as shares of Delta, Alaska and JetBlue last week.
Ahead of its report, United led a rally in airline stocks Monday. The Chicago- based company’s shares rose $ 1.70, or 2.5 percent, to close at $ 70.77. After the financial results were released, the shares gained another 73 cents in after- hours trading.
Airlines are prospering from travel demand that remains relatively strong. Reduced competition — several major airports are dominated by one or two carriers— may limit United’s financial fallout to the dragging incident.
Seth Kaplan, managing partner of industry newsletter Airline Weekly, said one- time events rarely have a lasting impact on an airline’s revenue. He said a few travelers with options might try another airline, but United loyalists will be pragmatic and take a longer view — and United has been making impressive strides.
“They are more punctual, they’re losing fewer bags,” Kaplan said. “But it takes some time for the perception to catch up with the reality. This resets the clock. It was the last thing they needed.”