Just when passengers are being nickeled and dimed as if there’s no tomorrow, the parent company of United Airlines announced it earned $273 million in the second quarter of 2010, making it the most profitable quarter in nearly three years. UAL Corp.’s quarterly revenue rose 28.4 percent to $5.16 billion.
The earnings report caused its stock to rise 48 cents, or 2.3 percent, to $21.66 on the following morning. As of July 22nd market close, the stock was listed at $22.78.
This gain shouldn’t be taken personally by passengers. Skip the fact airfares have gone up and it costs $450 each way to upgrade from economy to business class (and not if you opted for the cheapest fare) plus 20,000 miles if you’re flying overseas. And champagne is a thing of the past unless you can persuade a flight attendant to sneak you a glass from the First class section.
Several things improved for the nation’s third-biggest airline, suggesting that it is benefiting from an economic recovery. Per-seat revenue rose 26.9 percent, to 13.02 cents per available seat mile. Cargo revenue increased 57 percent.
A year ago the company earned $28 million because of gains on fuel hedging. This time, UAL’s profit — $1.29 per share — came from flying. But wait a second. Aren’t passengers still paying fuel surcharges, even though its price is no longer at the high, when the fee was imposed?
Not counting special charges, UAL said it would have earned $430 million, or $1.95 per share. Analysts surveyed by Thomson Reuters were expecting a profit of $1.74 per share on revenue of $5.12 billion.
UAL finished the quarter with $5.17 billion in cash. Its headcount shrank 2.7 percent from a year ago, to 42,600 full-time equivalent employees.
Capacity on United mainline jets fell 1.6 percent as it shifted flying to regional airlines flying under the United Express name. Counting those regional airlines, overall flying rose 1.1 percent.
Costs rose 1.9 percent for each mile it flew, not counting fuel and other charges. Don’t get me wrong. Airlines should make a profit. But should it be at the expense of passengers – not to mention the flight crews who’ve taken salary cuts and seen their pensions disappear? In addition, there are fewer attendants in the cabin – all the better not to serve passengers.
United passengers also need to watch their weight for fear they might be asked to deplane as 20 people were recently on a flight from Maine to Washington, DC. Was it because there were too many travelers aboard? Or might it have been that cargo is more profitable than ferrying people? Beats me – but then, I don’t pretend to be an expert about the aviation industry.
Thank goodness for Consumer Traveler to keep me enlightened. People may wonder where all of these profits are going. Perhaps it’s to the lawyers who are hammering out the details of the United and Continental Airlines merger.
How many other people are confused or annoyed when they can’t snag an upgrade? And that goes for 1K members, who have System-wide upgrades in their account but can’t be confirmed in business class until they arrive at the airport.
Karen Fawcett is president of Bonjour Paris
Karen Fawcett loves to travel anywhere. Karen was a founder & president BonjourParis.com while living in Paris for more than 25 years. She has traveled across Europe and the rest of the world. She is now based in Washington, DC.
