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%.