United’s 1Q profit fell 69 per cent, before dragging incident

DALLAS — United Airlines’ profit plunged 69 per cent 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.

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 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 to 3 per cent 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 all last week, it has had little effect on United’s stock. United Continental Holdings Inc. stock 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 per cent, to close at $70.77. After the financial results were released, the shares gained another 73 cents in after-hours trading.

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

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.

Still, Cowen and Co. analyst Helane Becker said Monday that investors should be concerned if the incident leads to more government regulation of the airlines.

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.

Besides the damage to United’s reputation, investors are nervous that airlines are planning to add too many flights, undercutting the recovery in prices.

United will increase domestic service this summer, adding some new routes and offering more-frequent flights on others. Munoz has defended the expansion as necessary to fill gaps in United’s route map that were created when the airline was shrinking.

United executives planned to discuss the first-quarter results with analysts and reporters on Tuesday.

Just Posted

911 operator helps Red Deer couple during birth

Meet for the first time Thursday

Canada’s 150 year ends on ice, but no hockey pucks, triple jumps allowed

OTTAWA — No figure skating. No hockey. No racing. No cell phones.… Continue reading

Banner signing at Collicutt Centre

International Day of Persons with Disabilities

Regulator investigating Sears Canada liquidation sale prices: monitor

TORONTO — The Competition Bureau is investigating allegations that prices on some… Continue reading

Video: Joshua Frank explains shooting Gordon, Sandra and Monica Klaus

Frank and Jason Klaus are facing triple murder charges in the deaths Klaus’ parents and sister

Updated: Missing Sylvan Lake women found

Women were reported missing earlier this week

Liberals propose billions for affordable housing, including individual benefits

A Liberal government fond of promising help for those working hard to… Continue reading

Alberta Party sees growth in Central Alberta

Greg Clark addressed health care needs addressed in Red Deer

Ponoka council freezes Ponoka Fire Department spending

All discretionary spending frozen until full budget numbers are presented

WATCH: Ponoka’s Festival of Trees sees continued support

Three days of celebration and fundraising held at the Calnash Ag Event Centre

Creationist will speak at home-schooling convention in Red Deer

Ken Ham has debated Bill Nye on the Earth’s origins

CP Holiday train makes stops in Central Alberta

The popular train will feature entertainment from Colin James and Emma-Lee

Cost to fix Phoenix pay system to surpass $540 million, auditor general says

The federal government’s chronic salary struggles will take more time and more… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month