United this morning reported a 2.4% decline in third quarter revenue to $10.3B, while earnings of $4.53 per share were below analyst’s consensus estimate of $4.55 per share. More concerning was the 5.8% drop in passenger revenue per available seat mile (PRASM) which most consider the key indicator of a carrier’s financial position. United said the declines were due to a drop off in corporate travel within the energy sector (due to the fallout from lower fuel prices), a strong dollar, and weakening domestic yields.
In other United news, Dan Reed of Forbes has an interesting take on why Brett Hart was handed the interim CEO title – Hart Is ‘Acting CEO’ At United Largely Because He Was Not Part Of The Continental Management Cabal
Both times United’s board – which arguably had been asleep at the wheel since the merger – chose as the company’s new leader, men who, while not exactly outsiders, had weaker ties to Smisek and/or the former Continental. Those former Continental-turned-United executives – most notably vice chairman and chief revenue officer Jim Compton and chief financial officer Gerry Laderman – have been passed over when the company’s board had to hire a new CEO under emergency-like circumstances not once, but twice in less than six weeks. In Hart’s case it is clear that the most valuable part of his resume has little to do with the fact that he possesses a law degree, earned at the University of Chicago; it’s his lack of a long-time association with Smisek.
Check out his interesting two page read here.
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