Lost business fall-out from Flight UA3411
Apr 15, 2017, 5:02 pm
#271
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If the damage to UA is sustained, I do wonder what routes we might see other airlines try to pick off. Maybe AA would upgauge DEN-LAX? An early-evening SFO-DEN from WN might attract more of the business crowd on that route, right now they just have 4PM and 10PM flights which has kept me from flying them on my trips out west.
Apr 15, 2017, 7:35 pm
#272
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it's 6 figures already for our agency and we're not even done yet, and we're a very small boutique firm, I can't even imagine the impact to UA's bottom line when you start aggregating all of the agencies, clients, and customers who will start avoiding UA, even temporarily. The loss of 1 billion in market cap last week was probably an accurate forecast for what is to come when the numbers are tallied for this, and next quarter. The only question is how deep and how long will this run.
Last edited by WineCountryUA; Apr 15, 2017 at 10:55 pm Reason: OT content removed per Moderator note
Apr 15, 2017, 10:07 pm
#273
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To suggest UAL lost 1 billion in market cap last week because of this event is laughable. The stock rebounded quite nicely actually, proving the efficiency of the market.
Apr 15, 2017, 10:37 pm
#274
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Apr 15, 2017, 11:13 pm
#275
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It is not to re-ligate the UA3411 incident, as we have a separate thread for that, http://www.flyertalk.com/forum/unite...il-2017-a.html. The circumstances of UA3411 are well known (even if not agreed to) and there is no reason to re-cover.
WineCountryUA
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Apr 15, 2017, 11:52 pm
#276
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There are/were countless companies that despite employing mostly good people caused a lot of harm to customers/clients/society in general because of actions of some idiots or crooks and management's tolerance for that... many of those companies are no longer in business...
Apr 15, 2017, 11:56 pm
#277
Join Date: Dec 2011
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Monday it closed at 71.50, Tuesday morning opened down and by Wednesday morning was already back at 71.28. A whopping 22 cents. UAL/DAL/AAL/LUV/JBLU were all down Friday, UAL the least as a matter of fact.
Apr 16, 2017, 1:01 am
#278
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Well, while everyone else is boycotting UA, I plan to continue to buy on some combination of price, upgradeability and route, without regard to loyalty, as before. Just having had a couple of RPUs clear on a domestic route I had not anticipated, maybe things will improve with fewer flyers.
As to United - there is a real, tangible perception that Dr Dao was targeted because he was Asian, and the way he was physically abused by the rent-a-cops in a such a violent, disrespectful manner, is also because he is Asian.
Again, nothing to do with right or wrong, accurate or not - it is the perception in that market right now that this is a racial issue more than just a police brutality or bad customer service issue.
Oscar's total mishandling of the issue just added more fuel to that fire, followed a few more similar stories popping out of the woodwork. For that reason, it is hard to forecast the likely damage to United in that market, even if the US market recoverers from its universal derision of this incident.
Again, nothing to do with right or wrong, accurate or not - it is the perception in that market right now that this is a racial issue more than just a police brutality or bad customer service issue.
Oscar's total mishandling of the issue just added more fuel to that fire, followed a few more similar stories popping out of the woodwork. For that reason, it is hard to forecast the likely damage to United in that market, even if the US market recoverers from its universal derision of this incident.
As I said earlier, the market with airlines is very inefficient, and takes a long while to react to fundamentals. High institutional ownership of some airlines, and since the airlines are volitile, lots of day traders. The market for united this week had more to do with rebound expections and the price of oil than fundamentals. The longer term price ( and by this I mean 3 month, not years long) definitely lags the actual performance of the airline, and this is particularly noticeable with united.
Last edited by WineCountryUA; Apr 16, 2017 at 2:05 am Reason: Discuss the issues, not the poster(s)
Apr 16, 2017, 3:15 am
#279
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The stock price took a "panic hit" when this was at its worst and then rebounded on value-seeking. For a comparison, when the market had an overnight collapse due to shock when Trump won the election, I had a call in to my broker to buy stocks for exactly this reason. But by the time the US markets opened, the market had bounced back: (1) The drop was on thin volume and (2) it was due to a knee-jerk reaction and you probably had some computers acting funny as well. So I didn't get to have any fun then...but the market rebound did validate my reaction.
As to UA, the stock is off a bit. From what I can tell, going from the close of business on Monday (when this started to make an impact) United has had the worst week of any mainland domestic carrier of any significant size [1], being off 4.1% (better than the nearly 7% it was off early Monday). American had a good time in the interim (+1.8%) as did Spirit (+2.7%) while Southwest was nearly flat (-0.4%). No surprises there: American was the biggest carrier not to have a bad news item drop on it (at one point they were up 6% on what I can best call schadenfreude) and Southwest was the next biggest...and Spirit should be able to make some hay on all that's happened lately.
All the others (Delta, Allegiant, JetBlue, and Alaska) clustered above United at about -2.0% to -2.5%, though it should be noted that as of Wednesday morning (before the $125m charge) Delta was doing a lot better (it was only behind American at that point).
Now, this is the behavior of the stock market over a few days and as noted there were other factors at play so we're not in "United's stock is doomed" territory yet...but it's going to be telling over the next month or two if UA is doing a bit worse than the others, a lot worse than the others, or if they converge again. That said, short-term I'd say that UA has the worst prognosis of the big four since DL's bad news is presumably mostly done with.
[1] I'm ignoring VX due to the merger situation and Hawaiian due to it being sort-of a special case.
As to UA, the stock is off a bit. From what I can tell, going from the close of business on Monday (when this started to make an impact) United has had the worst week of any mainland domestic carrier of any significant size [1], being off 4.1% (better than the nearly 7% it was off early Monday). American had a good time in the interim (+1.8%) as did Spirit (+2.7%) while Southwest was nearly flat (-0.4%). No surprises there: American was the biggest carrier not to have a bad news item drop on it (at one point they were up 6% on what I can best call schadenfreude) and Southwest was the next biggest...and Spirit should be able to make some hay on all that's happened lately.
All the others (Delta, Allegiant, JetBlue, and Alaska) clustered above United at about -2.0% to -2.5%, though it should be noted that as of Wednesday morning (before the $125m charge) Delta was doing a lot better (it was only behind American at that point).
Now, this is the behavior of the stock market over a few days and as noted there were other factors at play so we're not in "United's stock is doomed" territory yet...but it's going to be telling over the next month or two if UA is doing a bit worse than the others, a lot worse than the others, or if they converge again. That said, short-term I'd say that UA has the worst prognosis of the big four since DL's bad news is presumably mostly done with.
[1] I'm ignoring VX due to the merger situation and Hawaiian due to it being sort-of a special case.
Apr 16, 2017, 6:33 am
#280
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I can see it both ways.
I'm guessing Oscar will trot out Kirby on the Tuesday earnings call to say something about whether they're seeing any booking impact.
Which is all meaningless because no data now is going to be helpful in saying what behavior will be over the next 6 months. Further complicated by it being Easter week with no good yoy comparison.
But the stock could get turbulent, not that I would be involved in any airline stock at this point. Too reminiscent of the late 90s for airlines. It could have a few more years to run, but there are better risks out there.
Apr 16, 2017, 7:13 am
#281
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Given the early reports here and on some other threads of how toxic the UA brand has become in Asia, three particular parts of the network I'd be very wary of:
- US-Asia Flights - The interior China flights are likely done, and probably a lot less lift capacity to HKG, PVG and PEK. Maybe canning the NRT-ICN flight wasn't such a backwards move after all?
- NRT Hub - This could get interesting with the JV with NH. Perhaps it might be better for UA to let NH do more of the TPAC flying right now and insist on the cut of revenue per the JV agreement.
- GUM Hub/Micronesia Network - most of the traffic into GUM are Asian tourists. DL has made some inroads into GUM lately, but a massive boycott of the GUM hub carrier could have significant impacts on the GUM economy overall. And if the GUM Hub loses legs, this will hurt the Pacific Island nations who use the Island Hopper and other flights as an essential air service, with less connectivity available through the GUM hub pulses they connect to. If the boycott from Asia is as severe as it might be and sticks, five years from now we could be looking at a DL Hub in GUM rather than UA.
Apr 16, 2017, 8:05 am
#282
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Hey, once they finish their merger the combined airline will have TWO routes from DEN.
If the damage to UA is sustained, I do wonder what routes we might see other airlines try to pick off. Maybe AA would upgauge DEN-LAX? An early-evening SFO-DEN from WN might attract more of the business crowd on that route, right now they just have 4PM and 10PM flights which has kept me from flying them on my trips out west.
If the damage to UA is sustained, I do wonder what routes we might see other airlines try to pick off. Maybe AA would upgauge DEN-LAX? An early-evening SFO-DEN from WN might attract more of the business crowd on that route, right now they just have 4PM and 10PM flights which has kept me from flying them on my trips out west.
Apr 16, 2017, 9:35 am
#283
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You're obviously not understanding my point. Most of the outrage is occurring in Asia. There is a perception that this incident was all, or in part, racially motivated. Again, what we think or know here is irrelevant. It is the perception that matters. It is the perception that will drive people away from United.
My statement was made to help people here understand this perception by stating it using a more western historical context. Obviously, this is not what happened - but in the eyes of people in Asia reviewing this incident, the perception is similar to what I described as an analogy.
What this means is, customers in the US might might move on from this incident sooner and easier than customers in Asia, due to the difference in perception.
My statement was made to help people here understand this perception by stating it using a more western historical context. Obviously, this is not what happened - but in the eyes of people in Asia reviewing this incident, the perception is similar to what I described as an analogy.
What this means is, customers in the US might might move on from this incident sooner and easier than customers in Asia, due to the difference in perception.
bocastephen isn't comparing this to Nazi salutes on a LH flight. But this is how this incident is being viewed in Asia.
Any of you guys remember the Korean nut rage incident? The daughter-executive caused a half-hour delay and the CEO had to bow and apologize on TV. And compare that to Oscar's dismissive response on Monday evening.
I go to a boarding school with a good number of international students who fly round-trip TPAC or TATL three times a year, many of them in F/J. Guess what? Their parents aren't price sensitive and many of them don't care about FF programs since they can pay cash for premium cabins, so most of them aren't going to fly UA this summer.
Shouldn't it also drive them away from the United States? Or is their perception that United-the-airline is racist and United-States-The-Overall-Country is just fine and safe? In other words, as long as you don't try to fly United Airlines and don't come across their carefully selected racist ORD nazi storm troopers, you will be fine?
I think most people are probably a bit smarter than that.
I think most people are probably a bit smarter than that.
Look at the ruckus that is Trump's EOs, the difficulty of getting a visa, the airport chaos with CBP/TSA. Toss in a state-sponsored media eager to bash the United States for any shooting/police brutality/whatever incident. For an average Chinese person who has limited exposure to Western media, this only furthers the perception that Americans are hostile and belligerent. That's less business for airlines flying TPAC.
Last Monday, market opened at $70.50. It closed at $71.53. Oscar felt that investors did not care about the incident and therefore issued his email backing up his employees Monday night.
Except that they did care. Monday night in the U.S., the UA incident made the rounds on mainstream media channels, blew up here on FT, and when Asians woke up on their side of the planet, they logged into social media and guess what they see? After-hours trading dropped 2% in the evening, and then shares dropped another 2-3% on Tuesday morning and hit a low of $68.46. That was when Oscar changed his tone, of course.
Shares are still over 2% down from Monday market open and 4% down from Monday market close. Rebound? Nope.
Not a good week for UAL.
By contrast, AA gained 3.58% over the past week.
EDIT: My bet is that the bump on Wednesday market open was the result of a short squeeze. I'll see where I can grab the data.
Last edited by WineCountryUA; Apr 16, 2017 at 12:21 pm Reason: merging consecutive posts by same member -- please use multi-quote
Apr 16, 2017, 9:54 am
#284
Join Date: Aug 2007
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Lost business?
On SNL Weekend Update last night, Colin Jost said something like:
I am never going to fly United again - unless they offer the lowest fare to where I want to go.
I am not saying there will be no long-term fall out, nor am I saying that United is not going to feel the pain for a long time, but...
On SNL Weekend Update last night, Colin Jost said something like:
I am never going to fly United again - unless they offer the lowest fare to where I want to go.
I am not saying there will be no long-term fall out, nor am I saying that United is not going to feel the pain for a long time, but...
Apr 16, 2017, 10:07 am
#285
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I have to say, if true, the weirdest response I have heard. I can see a company doing business in Asia, or with angry Asian staff, taking a stand (the stories in the Chinese/Asian press have readily damaged united, the globe logo has been so to speak stained with Chinese blood) but to affirmatively go and and say 'what you did is awesome, we are supporting them, fly them, not OALs that don't beat up their Asian customers' makes me really question their judgement......
UA has tens of thousands of employees working hard every day to provide a safe and reliable sevice. My company and employees have more of an issue with the Chicago Airport Police and their actions.
Thus, we will give our vote of confidence, with our travel dollars, to United and its employees.