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United, After $609 Million Loss: ‘What Me Worry?’

This week, most U.S. airlines report their financial results for the first three months of 2014. And for the most part, the results thus far have been impressive, in spite of the negative effects of a stretch of unusually inclement winter weather, and high fuel prices.

American—which has its hands full implementing its merger with US Airways—managed a profit of $480 million, a record for the quarter.

Southwest’s $152 million profit was also a record.

Delta beat its previous-year’s performance by $7 million, with a $213 million profit for the first quarter of 2014.

JetBlue was disproportionately affected by the storms in the Northeast but still managed to turn a profit of $4 million.

United, on the other hand, lost a staggering $609 million for the quarter. So what’s the problem?

Jeff Smisek, United’s president and CEO, began the airline’s earnings call with an almost comical understatement: “Our financial performance in the first quarter was disappointing.” He alluded to the challenges posed by the weather, which was responsible for the cancellation of 35,000 flights. And he made some vague promises to cut costs and “invest in our employees.” But there was a notable lack of specificity as to either the nature of the airline’s problems or a viable path to addressing them.

Back in 2010, when United merged with Continental, the airlines’ promise was that the tie-up would be a huge plus for travelers, resulting in the world’s largest and best frequent-flyer program, among other great leaps forward. A press release from the period crowed: “Combining the loyalty programs of Continental Airlines and United Airlines will create the industry’s leading frequent flyer program, providing more opportunities for more customers to earn and redeem more miles in more places worldwide with more partners, including our Star Alliance partners. The new frequent flyer program ill combine valuable features of Mileage Plus and OnePass from United and Continental.”

Today, no credible observer would seriously claim that MileagePlus is the industry’s leading mileage program, although it may indeed boast the largest membership. And the company has been plagued by systems glitches caused by the inept integration of the two airlines’ computer systems.

The merger plan, in other words, was badly executed, and the rosy promises have come to naught.

What may be even worse is United’s current situation: rosy promises and no plan at all.

Reader Reality Check

What would you do to fix United?

This article originally appeared on

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