United’s Q1 profit takes 69% nosedive

DALLAS: United Airlines’ profit plunged 69% 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, labour and maintenance all rose sharply in the first quarter, helping push United’s profit down to $96 million, despite higher revenue.

Excluding non-repeating items, United said first-quarter profit was 41 cents per share. Wall Street expected 38 cents per share, according to a FactSet survey of 16 analysts.

Revenue rose 3% to $8.42 billion, also topping forecasts. But operating costs jumped 8%, driven by a 28% increase in fuel, a 7% rise in labour, and a 13% in maintenance and repair expenses.

The results released on 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 revenue-per-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 1-3% 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.

Chief executive Oscar Munoz issued another apology on Monday.

“It is obvious from recent experiences that we need to do a much better job serving our customers,’’ he said in a statement. “The company is dedicated to setting the standard for customer service among US airlines.’’

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 travellers with options might try another airline, but United loyalists would 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.’’

United has said it is examining policies including booting passengers off sold-out flights, and has promised a complete review by April 30.

It has already taken some steps, including requiring that crew members flying to assignments book flights at least an hour early.

Had that policy been in place on April 9, it might have averted the need to remove four passengers to make room for Republic Airline employees on their way to staff a United Express flight the next morning.