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| United Airlines Profit Rises Despite Boycott Threats Over Passenger Treatment | United Airlines Profit Rises Despite Boycott Threats Over Passenger Treatment |
| (about 3 hours later) | |
| So much for the outrage directed at United Airlines. | So much for the outrage directed at United Airlines. |
| On Tuesday, the carrier released its first financial statement that included the period after security officers forcibly removed a 69-year-old passenger, Dr. David Dao, from a plane. The incident left him bloodied and disheveled and left United facing widespread calls for a boycott. Nearly three months later, it appears that all the public anger has not hurt the company’s bottom line. | |
| United reported a profit of $818 million in the most recent quarter, ending in June, up 39 percent compared with last year. Sales rose, too, as more customers booked flights with the carrier, amid rising demand for air service over all. In a separate report this month, United said that it had more than 71 million passengers during the first half of the year, up 4.2 percent compared with last year. | |
| The results point to an underlying principle about the airline business: Passengers, by and large, look for the most convenient and cheapest fares, not which airlines claim to offer the best service. The case of Dr. Dao and the initial public reaction put that principle to the test. A video of airport security officers dragging him off a flight on April 9 ricocheted around the world after another passenger posted it to Twitter. Dr. Dao’s lawyer said the removal, to make his seat available to a United employee, had left Dr. Dao with a broken nose, a concussion, two knocked-out teeth and sinus problems. | |
| The event became a public-relations nightmare for United, generating weeks of bad news. Elected officials in Washington threatened consequences for United, and customers promised to boycott the carrier. United’s chief executive, Oscar Munoz, did not get an expected promotion to board chairman. | |
| Dr. Dao later settled with United for an undisclosed amount. | Dr. Dao later settled with United for an undisclosed amount. |
| Dr. Dao’s treatment touched a nerve among fliers, who have been squeezing into smaller seats on crowded aircraft. Air travel has become an increasingly uncomfortable experience for all but the wealthiest passengers. | |
| But spurning an airline is challenging, given the waves of consolidation that have put the majority of flights in the United States under the control of four carriers — United, Delta, American and Southwest. “It’s very difficult at this point in time for consumers to exact a penalty against airlines that have exhibited poor customer service” or been involved in a high-profile situation like Mr. Dao’s removal, said John Kwoka Jr., a Northeastern University economics professor who has advised state attorneys general on airline mergers. | |
| Also complicating those calls is the simple fact that for many leisure fliers, price is paramount. United is finding ways to reach those fliers. Like other carriers, United has introduced “basic economy” tickets that offer a bare-bones travel experience for the lowest cost possible on any given route. “What the airlines have learned is the customer cares about low prices more than anything else,” said Michael J. Mazzeo, an associate professor at Northwestern University who has studied the industry. | |
| United has taken steps to prevent incidents like Dr. Dao’s removal from happening again, like adding rules about when passengers can be removed from planes and increasing the financial incentives it offers customers aboard overbooked flights. | United has taken steps to prevent incidents like Dr. Dao’s removal from happening again, like adding rules about when passengers can be removed from planes and increasing the financial incentives it offers customers aboard overbooked flights. |
| In a statement on Tuesday, Mr. Munoz, the chief executive, said that the ”positive financial and operational performance this past quarter demonstrates that United is firmly on the right path.” Leaders of the company, including Mr. Munoz, are scheduled to discuss the company’s performance with analysts on Wednesday morning. | |
| While United seems to have survived the uproar generated by Dr. Dao’s removal, the company faces significant challenges. The company earned $914 million in the first half of the year, up just 1.4 percent compared with the same period a year earlier. And the company is still lagging some of its competitors on critical measures. | |
| Delta Air Lines’ profit for the second quarter came in at $1.2 billion, about double United’s profit. Delta’s profit margins are also consistently higher than United’s margins, as well as those of other airlines. | |
| United’s stock fell 1.1 percent in aftermarket trading on Tuesday evening, after the earnings were released. For the year to date, United shares are up 8.5 percent. | |
| In its statement Tuesday, United said that in the second quarter it was able to beat its main competitors on some metrics, like on-time arrivals and departure performance. |