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Parent of United Airlines 1Q loss doubles after issues with computer switchover
Sorry for the inconvenience. United Airlines is experiencing technical difficulties.
That was the story in the first quarter for the world's biggest airline. It lost $448 million as computer difficulties delayed flights, hurt bookings and frustrated passengers. A growing fuel bill didn't help. And travel is usually weak in the first three months of the year.
The man who runs the airline acknowledged the computer issues caused anxiety for those who fly United and those who invest in it.
To passengers, CEO Jeff Smisek apologized for poor customer service. To investors, he said the hiccups are mostly over and the computer integration that caused them should lead to more profits in the future.
"We weren't able to deliver the level of customer service that we wanted and that our customers have come to expect," he said on Thursday.
There was a bit of good news. On an adjusted basis, United's loss of 87 cents per share was actually less than analysts had feared.
United and Continental merged in 2010, but only in the last few months did they combine frequent-flier accounts and retire Continental's name from tickets and airport signs.
Behind the scenes, United combined two important, massive computer systems ' one that helps it predict how many tickets it should sell, and another that tracks passenger information. The airline had practiced extensively for the switch, which Smisek called a "monumental task."
Some parts went well. But others didn't. One switchover on March 3 caused flight delays for several days. Customer frustration with upgrades and long waits to speak to United agents on the phone persisted for weeks.
To get ready for the switch, United overbooked fewer seats than usual. The idea was to reduce the number of passengers who needed to find another flight if things didn't go well. That part worked ' but it meant that the airline turned away more late-booking travelers, the high-paying passengers who pay the most for their tickets.
Per-mile passenger revenue ' a closely watched revenue measure for airlines ' rose 5.2 percent. United's closest competitor, Delta Air Lines Inc., saw passenger revenue rise 14 percent.
United Continental Holdings Inc. said its first-quarter loss was $1.36 per share. Revenue rose 4.9 percent to $8.6 billion. In the year-earlier quarter, United lost $213 million, or 65 cents per share, on revenue of $8.2 billion.
Not counting integration costs of about $134 million, United would have lost $286 million, or 87 cents per share. Analysts surveyed by FactSet expected a loss of $1.12 per share.
United's fuel bill rose almost 21 percent, or $557 million, over the same period last year. Airlines have been raising fares to offset that fuel price increase.
In afternoon trading, United Continental shares fell 84 cents, or 3.7 percent, to $22.13.