Not Quite Rising Yet United Airlines' Profit Drops 14% in First Quarter
Comerford, Mike, Daily Herald (Arlington Heights, IL)
Byline: Mike Comerford Daily Herald Business Writer
Tuesday was James Goodwin's first meeting with the press since being named UAL Corp.'s next chief executive officer. Unfortunately, he was bearing mixed news about the airline's financial performance and service.
UAL, the Elk Grove Township-based parent corporation of United Airlines, reported that first-quarter profit fell 14 percent as the airline faced more competition on routes between the United States and Europe and business travelers sought discount fares.
However, Goodwin, who is set to succeed outgoing CEO Gerald Greenwald in mid-July, said the quarter showed trends that bode well for the year.
"The first quarter was really an excellent story," said Goodwin, of South Barrington. "It is markedly more positive than the fourth quarter of 1998."
Net income slid to $187 million, or $1.54 a fully distributed share, from $218 million, or $1.68, in the year-earlier quarter. However, earnings topped the highest per-share estimate of $1.50 from analysts surveyed by First Call Corp. Revenue rose 2.6 percent to $4.16 billion.
As for the leadership changeover, Goodwin promised "evolutionary" changes and a commitment to Greenwald's long-term strategies.
United, which generates a third of its revenue from international flights, faced more competition from rivals such as British Airways PLC and AMR Corp.'s American Airlines in Europe even as Asia demand improved. Fares fell because carriers added planes on routes between the United States and Europe faster than travel increased and businesses cut back on paying full-price fares.
"Asia seems to have turned the corner, and there's been an uptick in business demand evident in February and into March," said Brian Harris, an analyst at Salomon Smith Barney, who has a "buy" rating on Chicago-based UAL. …