United shares slide on revenue forecast
CEO Munoz says airline reducing passenger bumpings by 85%
DALLAS — Shares of United Airlines’ parent tumbled Wednesday on the company’s weak forecast about revenue trends for the rest of the summer.
United said that a revenue measure that often mirrors average fares would be flat in the third quarter after rising 2.1 percent from April through June. Rival Delta Air Lines gave a much more bullish prediction last week.
On a conference call Wednesday, United executives blamed other factors including rising competition in key markets such as China.
United Continental Holdings Inc. shares fell $ 4.66, or 5.9 percent, to close at $ 74.24. Shares of the four other largest U. S. airlines dropped by 1 percent or less.
The revenue forecast, combined with plans for more growth in the third quarter, put a damper on United’s report after the market closed Tuesday that second- quarter profit rose to $ 818 million, beating Wall Street expectations.
It was United’s first report since the widely seen video from April in which passenger Dr. David Dao was dragged off an overbooked flight at O’Hare Airport. The publicity led United to make changes, including raising the amounts that employees can offer passengers to give up their seats.
CEO Oscar Munoz said the changes have reduced bumping passengers by 85 percent.
Executives said United will test technology that lets the airline offer customers on full flights a travel voucher to give up their seat, which United would try to resell at a higher price. In the test, United will send out offers several days before the flight rather than waiting until passengers are at the gate or even — as in the April incident — seated on the plane.
Andrew Nocella, United’s chief commercial officer, said the airline would start testing the idea with about 50 customers in the next few weeks.
“We think it’s a great idea, and if it works and our customers appreciate it, a lot more to come,” he said.