The thrashing the public gave to United Airlines after the
carrier forcibly removed a passenger from a plane last week has raised
questions from corporate customers, but United executives said it will have no
long-term effects on the carrier's corporate business.
CEO Oscar Munoz opened the carrier's quarterly earnings call
with an apology for the
incident, and president Scott Kirby said the carrier and its sales team
have been fielding related concerns from corporate customers. The sales team
also put out a note last week reminding corporate customers that bumping
managed corporate travelers is rare and that, "in the very unlikely event
a customer traveling on a corporate contracted fare is involuntarily denied
boarding, United sales will work with the corporate account to provide
additional compensation [to the corporation] in the form of United Services
Funds beyond what they are owed under the involuntary denied boarding
rules."
Corporate customer response has been largely supportive,
Kirby said. "They want us to fix this. They want us to do the right thing.
But they believe in us and believe that we will get this fixed. And we will be
stronger and have better customer service when we get through this."
United already has announced two
policy changes:
- It no longer will use law enforcement officers
to remove passengers except in matters of safety and security.
- It now requires crew members that need to travel
to another airport for work to book seats at least an hour before departure.
United is still "reviewing a broader array of policies
and systems" related to the incident and plans to announce more changes by
April 30, Munoz said.
Q1 Performance
In the first quarter, United saw strong momentum in
corporate business, as corporate revenue rose 11 percent year over year, Kirby
said. The previous three quarters, corporate revenue had declined an average of
1 percent year over year. Additionally, close-in bookings, which tend to come
from business travelers, rose 12 percent year over year in the first quarter. "The
Easter shift and extra Friday in March did help, but we also think this is
evidence that United is restoring its natural market share," he said.
An improving operational performance has driven that growth,
executives said. During the quarter, United reported a 99.1 percent mainline completion
factor, up from 98.2 percent in the first quarter of 2016, and it had 25 days
with 100 percent mainline completion. That's more than it had from 2011 to 2015
combined and more than it had in 2016, when the carrier set a record, Kirby
said. February 2017 also was a record February for on-time performance, and
then March 2017 set a record for March, he said.
Total passenger revenue increased 2.6 percent year over year
to $7.2 billion during the first quarter. Traffic increased 2.2 percent, and
capacity increased 2.6 percent, pushing load factor down 0.3 percentage points
to 79.9 percent. Yield increased 0.4 percent.
United
reported a net income of $96 million for the quarter, down from $313 million in
the first quarter of 2016. Operating expenses rose 10 percent year over year,
due largely to higher fuel costs and increased expenses from labor agreements
ratified last year.