United Continental’s financial health showed strength on Monday even as the giant airline’s brand suffered from a week-long battering following the release of a now-infamous video showing a passenger being dragged off an overbooked flight in Chicago.
United’s stock was robust, spiking to $71.50 a share in after-hours trading Monday after the financial results were announced. With Monday’s climb, the shares are above where they were during the heart of the fallout from the ugly video.
The company on Monday reported first-quarter revenue of $8.42 billion, exceeding analysts’ forecasts of $8.38 billion and up 2.7 percent from the prior year’s quarter. The company’s first-quarter net income was $96 million.
Monday’s earnings report was accompanied by yet another mea culpa from chief executive Oscar Munoz, who has been in damage-control mode over a series of embarrassments.
“It is obvious from recent experiences that we need to do a much better job serving our customers,” Munoz said in a news release accompanying the earnings.
Munoz has apologized several times following the video of security personnel dragging 69-year-old David Dao off the Chicago-to-Louisville flight. Dao’s attorney said his client will likely sue the 91-year-old carrier.
Even as customers called for a boycott of United, experts said the airline would likely recover from any reputational damage. Michael Rubin, a crisis communications expert at Levick Communications, said last week as the video spread across social media and the scandal grew that the airline needed to make appropriate apologies before it could get break the bad-news cycle. Munoz’s initial statement backing his employees was roundly criticized as tone deaf.
“I don’t anticipate that this will affect their business or revenues in the near term,” Rubin said. “Over the long run, it can affect consumer choices.
“They need to contain the damage, eat humble pie and then try to move on,” Rubin said. “They just don’t want to be a late-night joke.”
Munoz has issued more emphatic apologies to the public and Dao personally and is expected to keep up his contrite ways in Tuesday’s earnings call with analysts.
The fallout from the passenger video “will prove to be a watershed moment for our company, and we are more determined than ever to put our customers at the center of everything we do,” Munoz said in Monday’s release. “We are dedicated to setting the standard for customer service among U.S. airlines, as we elevate the experience our customers have with us from booking to baggage claim.
United, with 84,000 employees operating 5,500 daily flights, has been barraged by bad publicity both new and old, some of which has been dredged up following the passenger fracas.
In 2008 the airline forced a musician to put his guitar in the baggage hold, refusing to allow the $3,500 custom Taylor instrument in the cabin. United refused to pay for the damaged instrument, and the guitarist wrote a song titled “United Breaks Guitars,” which went viral on YouTube.
Last month, United barred two girls wearing leggings from boarding a flight because they violated the company’s dress code for employee friends and family members who fly free. Last week, a couple returning from vacation in Mexico apparently brought on an unexpected passenger: a scorpion. The scorpion was disposed of in the jet’s toilet, but not before stinging the passenger.
Even as the company sought to recover, a report surfaced Monday that a couple on their way to be married in Costa Rica were thrown off a United Flight after the airline accused them of attempting to sit in upgraded seats they had not paid for. The couple said they had moved to other seats because a sleeping passenger was sprawled across the ticketed row.
A United spokeswoman said the airline asked the couple if they wanted to pay the difference in fare, but that they declined. United offered them a discounted rate at a hotel for Saturday night and rebooked them for a Sunday morning flight.