This Tirade From United Airlines May Have Sunk Its Stock

For the past two years, airline executives have done their share of groveling before analysts, vowing to be more humble in their ambitions to control the skies so as not to deluge the market with additional service when demand isn’t there.

Not so on Tuesday with United Airlines (UAL).

President Scott Kirby gave a more impassioned defense of the company’s growth plans — or, in industry speak, “capacity” — than has been normal for earnings conference calls since 2015. During that year, cheap oil enticed airlines to broaden their flight coverage a bit more than Wall Street was comfortable with.

“You guys used to get on this earnings call and beat them up about why aren’t their finances good,” Kirby said on United’s first-quarter earnings call on Tuesday. “And you gave them a cure for that, which was ‘Cut capacity, cut capacity, cut capacity.’ And it just made the problem worse.”

That remark came in response to a question about how United’s growth plans might impact margins. United has said it wants to boost margins by gaining or reclaiming market share. However, management stressed that it didn’t view their capacity growth — expected to be up 2.5% to 3.5% this year — as invading a rival’s turf but reclaiming what was United’s “natural” share.

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source: http://www.investors.com/news/here-is-what-may-have-sunk-united-airlines-stock-today/

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