United Airlines shares tumble on disappointing 3Q outlook
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Shares of United Airlines' parent tumbled Wednesday on the company's weak forecast about revenue trends for the rest of the summer.
United said that a revenue measure that often mirrors average fares would be flat in the third quarter after rising 2.1 percent from April through June. Rival Delta Air Lines gave a much more bullish prediction last week.
On a conference call Wednesday, United executives blamed other factors including rising competition in key markets such as China.
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United Continental Holdings Inc. shares fell $4.66, or 5.9 percent, to close at $74.24. Shares of the four other largest U.S. airlines dropped by 1 percent or less.
The revenue forecast, combined with plans for more growth in the third quarter, put a damper on United's report after the market closed Tuesday that second-quarter profit rose to $818 million, beating Wall Street expectations.
It was United's first report since the widely seen video from April in which a passenger was dragged off an overbooked flight. The publicity led United to make changes, including raising the amounts that employees can offer passengers to give up their seats.
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CEO Oscar Munoz said the changes have reduced bumping passengers by 85 percent.
Executives said United will test technology that lets the airline offer customers on full flights a travel voucher to give up their seat, which United would try to resell at a higher price. In the test, United will send out offers several days before the flight rather than waiting until passengers are at the gate or even — as in the April incident — seated on the plane.
Andrew Nocella, United's chief commercial officer, said the airline would start testing the idea with about 50 customers in the next few weeks.
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"We think it's a great idea, and if it works and our customers appreciate it, a lot more to come," he said.
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David Koenig can be reached at http://twitter.com/airlinewriter