United Airlines' corporate travel revenue continues to improve from the lows witnessed earlier this year, executives said today, but not enough to keep the carrier from detailing a third-quarter loss.
"We're beginning to see gradual improvements in corporate portfolio performance," United president and COO John Tague said during today's third-quarter earnings call. Tague said that corporate revenues earlier this year were down by a magnitude of 40 percent from 2008. Though still down, he said that figure is "now down 25 percent," representing the steady revenue improvement the carrier has seen as the year progresses.
Tague said the carrier's "high exposure to business and premium traffic made us more susceptible to the reduction in corporate travel spending." Likewise, executives said, the carrier is poised to benefit from any return.
CEO Glenn Tilton also said carrier was beginning to see "signs of optimism in the revenue environment," including "early signs of recovery in business and premium demand."
Still, Tilton said the carrier is closely eyeing demand trends as companies set 2010 travel budgets.
CFO Kathryn Mikells said revenue improvements from this year's second quarter to the third quarter were greater than the same quarter-over-quarter improvements reported in 2008, attributing those gradual revenue gains to more than just seasonality. Mikells said United is "beyond the bottom and seeing trends improve."
However, Southwest Airlines CEO Gary Kelly last week said that "there is no evidence of any significant change in business travel demand, i.e. full-fare demand"
(BTNonline, Oct. 19). Addressing what could be perceived as a discrepancy between the two carriers' outlooks, Mikells pointed toward United's stronger reliance on corporate and premium traffic. "I don't think it actually would be unusual for us to see different trends from the low-cost carriers," she said.
Reporting a $63 million net loss, United is the first of the major legacy airlines to report third-quarter earnings, with the other majors scheduled to follow this week.