The group's quarterly loss, which marks its first decent into the red since the recession of the early 1990s, compares with profits of $359 million in the September quarter a year ago. Blame for the profits collapse is squarely pinned on the deluge of operational problems that led the carrier to cancel thousands of flights over the summer.
Problems started to become apparent even before the summer began, as United faced the prospect of a pilots shortage. An overtime ban associated with the re-negotiation of the pilot contract, which expired in April, has been a major factor, although the Air Line Pilots Association had counter-claimed that the airline's hiring policies were at fault. To add to United's woes, operations were further impacted by a mix of bad weather and air traffic control delays.
As a result of the cancellations United carried close to 10% fewer passengers in the quarter and flew 2.9% fewer seat miles. A deal has now been struck with the pilot group, although United chairman James Goodwin warns that the "financial implications" of this together with fuel prices will continue to reverberate into the final quarter of the year, where another loss is now likely. On the positive side, cancellations are down 60% and punctuality up 40%since the height of the problems.
Elsewhere, United's merger partner US Airways also reported a loss for the quarter, albeit cut to $30 million, from the heavy $85 million loss a year ago. By way of contrast, the American Airlines and Northwest Airlines groups both reported significant improvements in their quarterly net profits.
Source: Airline Business