United reports revenue growth as CEO promises to put customers first
United Airlines reported strong first-quarter earnings Monday but airline executives said the carrier still needs to focus on improving customer service following the forcible removal of a passenger who refused to give up his seat.
Oscar Munoz, chief executive of United Airlines, used the upbeat earnings report to take responsibility for the ugly scene that was recorded by fellow passengers and subsequently viewed by millions worldwide.
“This will prove to be a watershed moment for our company, and we are more determined than ever to put customers at the center of everything we do,” he said in a statement that accompanied the Chicago-based carrier’s earnings report.
United posted first-quarter net income of $96 million, or 31 cents a share, down from $313 million, or 88 cents, in the same period last year.
But excluding special items, United earned 41 cents a share, beating an average of 38 cents a share projected by analysts who were surveyed by Thomson Reuters. The special items included $37 million in severance and benefit costs.
First-quarter revenue was $8.4 billion, up 2.7%.
Expenses at the airline increased 7.9% to $8.1 billion largely because of higher fuel and labor costs.
The April 9 incident involving passenger Dr. David Dao of Elizabethtown, Ky., who was dragged out of his seat to make room for United employees, is sure to be discussed Tuesday morning during a conference call with analysts.
Dao suffered a broken nose and a concussion and lost two teeth in the bloody scuffle. Three officers involved in pulling him out of his seat have been suspended from the Chicago Department of Aviation. The names of the officers have not been released.
Dao has hired Chicago lawyer Thomas Demetrio to represent him in what is likely to be a multimillion-dollar lawsuit.
A hearing scheduled for Monday was canceled because United and the city of Chicago “agreed to preserve and protect the evidence requested,” including video and other records, Demetrio said in a statement.
The airline has said it is reviewing its policies around flights where too many tickets have been sold. Results of that review are expected by the end of the month. United already has announced some changes, including requiring United employees traveling for work to book seats at least an hour in advance to avoid displacing customers already onboard an aircraft.
United also said it will not ask law enforcement officers to remove passengers from flights unless it is a matter of safety and security and plans to improve training programs “to ensure our employees are prepared and empowered to put our customers first.”
The airline industry has enjoyed more than two years of exceptionally strong earnings thanks to steady demand for air travel, relatively cheap fuel and a surge in revenue from fees to check bags, upgrade seats and to purchase food, drinks and onboard entertainment.
Analysts have been predicting that airline profits would begin to flatten this year partly because of a slight increase in fuel and labor costs.
Chicago Tribune reporter Laura Zumbach contributed to this report.
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