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United Airlines posts staggering $537M Q1 loss, plans to cut jobs
United Airlines posted its quarterly earnings yesterday and they weren't pretty. The Chicago based carrier lost 537 million dollars in the first quarter, nearly a third of its market value as its stock plunged 37%. It was the company's largest loss since it came out of bankruptcy in the first quarter of 2006.In tandem with these numbers, the airline also announced that it would be cutting over 1,000 jobs and reducing flights in an effort to save cash.
And thus we see how a major carrier weathers the storm of high oil prices and a tight market. Fortunately for them, they had the assets and bandwidth to handle a few consecutive quarters of rough seas. Carriers like ATA and Skybus could not. The real question is thus: How many months of high oil prices can the airlines handle?
I have a feeling that this is not the end of woes for the industry -- each and every domestic carrier is facing the same market influences. It will be interesting to see how other airlines cope in the new oil market, what they do to keep ticket prices low and competition high. Perhaps they will raise fees on all likes of service from checked baggage to changed tickets. Or perhaps, as Richard Anderson of Delta Airlines suggested this week, they'll all just raise ticket prices 20%.
Reader Comments (Page 1 of 1)
Gary K Apr 25th 2008 10:15AM
I don't have a lot of sympathy for the likes of United or American, who continue to lose money and have the temerity to blame it on rising costs of fuel. Let's really get the facts straight. On most markets both carriers are robbing and raping the general public with fuel surcharges for each market, as well as 'Q' charges to cover security costs. For example, each ticket from Denver to Pittsburgh alone is charged an additional
$32.56 each way for "fuel surchages. That's right- you're paiying a fuel surcharge. Do the math. If 150 passengers are carried on that A320 Airbus- then United picked up $4,884.00 in fuel surchages alone to fly you from Denver to Pittsburgh. Try Denver to London- a staggering $121.00 is charged by United on their 777 service. On a full day, this yields United an additional $33,000.00 in fuel surcharges just for this flight alone.
Let's not forget that the cardboard paste we used to turn our noses up are now being hawked down the aisle of a 737 like week old popcorn at Wrigley Field. Now the new flavor -er price gouging-of the month is charging for checked baggage. What's next, charging per ice cube in your glass? If you didn't book your flight on the Internet, then one of their reservations center in India, where the indentured servants are making a whopping $1.72 an hour wil charge you a $20.00 fee to book a new reservation. Far be it that you should have to change that itinerary, you'll get charged another $100.00 for that luxury.
In bygone days United, like all other carriers paid retail travel agencies 10% to issue their tickets for them. Now they pay nothing for travel agencies to do the work that United is incapable of handling. Wow! an automatic 10% increase in revenue by cuttting commissions. Still this airline can not turn a profit? Katy, bar the door! Who's kidding who?
I'm tired of the lies that airlines like United and American continue to feed the general public. Face it. The real problem is piss-poor, blatantly stupid management---at the top!
If airlines like Qantas, British Airways, Deutsche Lufthansa, Aeroflot, Southwest, et al, can turn a profit, then there's no reason why Untied (sic) and Aluminum (sic) shouldn't be able to. The usual excuse is that all of the aformentioned airlines, save Southwest, are government owned. NOT! All of the aforementioned airlines are not government owned- they're private enterrprises. The next excuse is "well, they each have an injection of government capital." Wrong! It's airlines like United and American that are being injected by capital in the form of grandfathered routes and mail subsidies.
Truth of the matter is that the employees could do a better job of running United than their idiotic CEO and sophomoric, if not clueless, upper management.
These people would make Vanna White look like a candidate for MENSA.
Still don't think it's the stupidity of upper management? Remember Braniff International? Yes, good old BI and the jellybean fleet, who went from the most profitable airline in the world per revenue mile to bankruptsy in 2years- all because of blatantly stupid management. Gerard Arpey and Glenn Tilton should join the ranks of Harding Lawrence and C. Eddie Acker, the last two of whom wcaused the demise of Braniff. Later C. Eddie Acker went on to destroy venerable PanAm. If these two buffoons are too incompetent to run an airline then they should not let their egos get in the way. Step down and allow someone who can run an airline to take over.