Commentary

United's Profits Fly Way Above The Public Relations Turbulence

Despite all the negative publicity United Airlines received after its forcible ejection of a passenger from an overbooked flight became a social media meme as it bungled the immediate follow-up, the Chicago-based carrier yesterday posted strong sales and profits for its second quarter.

“So much for the outrage” is the lede on the wire services compilation carried by the Dallas Morning News.

“The airline was forced to repeatedly apologize for the incident, which its CEO called ‘truly horrific.’ United's top executives were even called to testify before Congress. It eventually reached an out-of-court settlement with the passenger, Dr. David Dao,” Chris Isidore reminds us for CNN Money. “The earnings statement Tuesday evening does not mention the incident. Airline executives instead focused on all that was positive in the report.” 

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But according to its guidance for the third quarter, also issued yesterday, United expects a rockier flight that has nothing to do with its passenger relations, which presumably are improving after it revamped its “customer experience” policies and procedures in late April.

“United said Tuesday that it expects a key revenue-per-seat figure to be flat in the July-through-September quarter. That tepid forecast fell far short of Delta Air Lines’ outlook for the rest of summer, and United’s shares dropped in extended trading,” reports the AP’s David Koenig in the Seattle Times.

“There are particular reasons for United’s more cautious outlook, including its exposure to competitive U.S.-China routes and Delta’s greater reliance on the strong U.S. travel market. Still, United’s third-quarter forecast is likely to renew investors’ concerns that airlines are again growing faster than demand requires, leading to too many seats for sale.”

United also said yesterday that it “has reduced the amount of overbooking. The airline operator said in May it saw a 79% decrease year over year in passengers being involuntarily denied boarding. In June, that metric declined 88% year over year,” Christine Wang reports for CNBC.com.

“The results point to an underlying principle about the airline business: Passengers, by and large, look for the most convenient and cheapest fares, not which airlines claim to offer the best service. The case of Dr. Dao and the initial public reaction put that principle to the test,” observes Micah Maidenberg for the New York Times. “… But spurning an airline is challenging, given the waves of consolidation that have put the majority of flights in the United States under the control of four carriers — United, Delta, American and Southwest.”

“It’s very difficult at this point in time for consumers to exact a penalty against airlines that have exhibited poor customer service or been involved in a high-profile situation like Mr. Dao’s removal,” John Kwoka Jr., a Northeastern University economics professor, tells Maidenberg. 

United’s 2Q 2017 earnings conference call will be webcast live at 9:30 a.m. CT this morning if you’re looking to hear directly from CEO Oscar Munoz, who lost his opportunity to become chairman over the incident. 

Meanwhile, citing higher labor and fuel costs, Delta Air Lines last week reported that its net income of $1.22 billion represented a 21% drop from the same quarter last year. 

“The results were hurt by a stormy April day in Atlanta that turned into a five-day interruption in operations,” the AP’s Koenig wrote at the time in a piece carried by ABCNews.com. “The airline struggled to get planes and crews back into position, and canceled about 4,000 flights. … CEO Ed Bastian said on a call with analysts that Delta sped up technology investments and made other changes so it can recover more quickly from interruptions this summer.”

Presumably, if United’s experience be any guide, it will also recover from any ill-will generated by its flap with Ann Coulter over its moving her from a pre-booked aisle seat with extra legroom to a window seat, purportedly without an explanation, on Saturday. It’s an incident that the right-wing commentator seems intent on keeping in the Twitter feeds and consciousness of Americans of all political leanings.

“According to a text conversation Coulter posted to Twitter on Tuesday, an unnamed ‘flight attendant’ claimed that Coulter was targeted on purpose to ‘make her life miserable,’” FoxNews.com reports. “… Coulter herself has not revealed the source of her information, or who exactly is doing the texting, but the conversation’s validity is already being called into question by Twitter users in the post’s comments,” the story continues.

And continues. And continues …

 
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