This Tirade From United Airlines May Have Sunk Its Stock

For the past two years, airline executives have done their share of groveling before analysts, vowing to be more humble in their ambitions to control the skies so as not to deluge the market with additional service when demand isn’t there.

Not so on Tuesday with United Airlines (UAL).

President Scott Kirby gave a more impassioned defense of the company’s growth plans — or, in industry speak, “capacity” — than has been normal for earnings conference calls since 2015. During that year, cheap oil enticed airlines to broaden their flight coverage a bit more than Wall Street was comfortable with.

“You guys used to get on this earnings call and beat them up about why aren’t their finances good,” Kirby said on United’s first-quarter earnings call on Tuesday. “And you gave them a cure for that, which was ‘Cut capacity, cut capacity, cut capacity.’ And it just made the problem worse.”

That remark came in response to a question about how United’s growth plans might impact margins. United has said it wants to boost margins by gaining or reclaiming market share. However, management stressed that it didn’t view their capacity growth — expected to be up 2.5% to 3.5% this year — as invading a rival’s turf but reclaiming what was United’s “natural” share.

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  • omen11

    I would never trust the management of UAL ever since the bankruptcy when they scrapped all the pension funds except their own. United was in the midst of an ESOP where the Union owned the company,which by the way,was impossible to succeed. That fact was well known by the company.They along with all the major corporations in the U.S. did not want an ESOP to succeed. So when labor contracts were being proposed they gave all the unions everything they asked for along with many of the rules. Then after a couple of years everything fell apart and bankruptsy came about.Of course there was much more to this story but now is not the time or the place.

  • no dilliger

    anytime they want to drive the stock prices down so the buy back is cheaper –more shares less invested ,then value returns after bad news cycle so beat up old guy publicly on slow news day ,drive down value ,buy deflated stocks ,wait awhile value returns =make mucho bucks