United Continental on Monday reported first-quarter earnings that topped forecasts, amid the backlash that followed a passenger’s removal last week Sunday.
The company earned an adjusted $US0.41 per share ($US0.38 expected) on operating revenue of $US8.42 billion ($US8.38 billion forecast.)
The highlight of these results is likely to be the earnings call on Tuesday, when analysts get to hear more from executives on the business and last week’s incident.
Law enforcement officers dragged Dr. David Dao off a plane on Sunday, April 9 after he was asked and refused to give up his seat for crew members even after an offer of $US800 in exchange.
“The incident that took place aboard Flight 3411 has been a humbling experience, and I take full responsibility,” United CEO Oscar Munoz said in the earnings statement. “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.”
Investors initially shrugged off the outcry, but sold shares as the video of a bloodied Dao continued to spread globally on social media. The stock fell 2.6% last week. That was a muted reaction considering its 21% rally in the prior 12 months, far outpacing shares of Delta and American Airlines. United closed 2.5% higher on Monday ahead of the earnings report.
United dealt with more controversy over the weekend after a couple headed to their wedding in Costa Rica claimed they were removed from a flight. The airline said they had tried to sit in a class they did not pay for.
Because the now-viral incident happened in April, any impact that #BoycottUnited and other protest action has on sales would only really show in the second-quarter earnings due about three months from now.
Last week, United Airlines raised its full-year outlook for capacity growth to a 2.5%-3.5% range, up from 1%-2%. In Monday’s statement, it said it expects passenger revenue per available seat mile (PRASM) in the second quarter in a range of 1%-3%. The company’s fuel costs increased by 28.1% year-on-year to $US1.56 billion in the first quarter.
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