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As United posts strong earnings, its CEO apologizes again

Airlines changing their ways?
Airlines changing their ways? 02:07

When United Continental (UAL) posted strong earnings on Monday, it also included an apology for its forceful removal of a passenger from a flight last week.   

United’s results beat analysts’ expectations on several key measures, yet when the company hosts its investor call on Tuesday morning, Wall Street may be more keyed into questions about the impact of the incident, which sparked an international backlash against the airline.

Whether consumers opt to fly other carriers in response to the treatment of the passenger, Dr. David Dao, will be carefully watched by investors and analysts. Domestic bookings dropped slightly over the weekend, although the dip could have been related to fare sales at Spirit and Frontier, according to flight-tracking site Hopper. Since then, booking volume has recovered. With just four big carriers dominating commercial air travel, some consumers may have little choice but to book a United flight. 

“In the first quarter of 2017, our financial and operational performance gives us a lot of confidence about the foundation we are building. It is obvious from recent experiences that we need to do a much better job serving our customers,” Chief Executive Oscar Munoz said in a statement.

United Airlines is reeling from a turbulent public reaction over its treatment of Dao, who was physically dragged from a flight. Passengers were chosen at random to be bumped from the flight, including Dao and his wife. He was shown screaming as officers pull him from his seat. 

United responds 02:04

Last week, Dao’s attorney said his client suffered a severe concussion and a broken nose, and lost two front teeth. Dao spent several days in the hospital after the April 9 incident. 

The parent company of United Airlines, the U.S. industry’s third-largest by passenger traffic, reported earnings of 41 cents per share, excluding special items, beating analysts’ consensus forecast of 38 cents.

Revenue of $8.4 billion was up 2.7 percent year-over-year, slightly above the average estimate of $8.38 billion. Passenger unit revenue, which measures sales relative to flight capacity, was flat, in line with the Chicago-based company’s estimate.

United estimated a 1 to 3 percent increase in that closely watched measure in the second quarter.

United lawsuit analysis 04:14

Higher fuel costs and recent labor agreements led to a 5.1 percent increase in unit cost per available seat mile from the year-ago period.

United is recovering from a public relations debacle after a passenger, Dr. David Dao, was dragged from his seat off the plane in O’Hare International Airport to make space for crew members.

“The incident that took place aboard Flight 3411 has been a humbling experience, and I take full responsibility. This will prove to be a watershed moment for our company, and we are more determined than ever to put our customers at the center of everything we do,” Munoz said.

United shares edged up 0.9 percent after closing up 2.46 percent at $70.77.

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