Oil Prices, Economy Also To Blame... But Pilot Shortage A
There are unconfirmed
reports Chicken Little has been sighted in the vicinity of United
Airlines headquarters in Chicago. In the past two days, stock in
parent company UAL Corp. has plummeted over 20 percent, due to
growing concerns about the economy, and labor strife at the
nation's #2 airline.
On Monday, shares in UAL Corp fell 5.9 percent, after one
industry analyst downgraded his rating in the airline due to
growing labor problems. The Chicago Tribune reports Soleil
Securities Group analyst James Higgins cited "rising evidence" that
organized 'sick-outs' by pilots contributed to the airline's
abysmal performance in December, which saw United rack up twice the
industry average number of delays.
United says the rash of delays and flight cancellations were due
to poor weather; with hubs in Denver and Chicago, the airline is
particularly susceptible to winter conditions. Higgins says pilot
actions are to blame for a portion of those problems, as well.
"We believe UAL management's view that weather was a key factor
behind the many December flight cancellations, but also think pilot
behavior exacerbated the situation," Higgins said in a report to
investors. "The pilots' anger is manifesting itself in several
ways. Most notable is a perfectly legal refusal to accept flying
beyond amounts specified in their contract. We also believe UAL is
facing increasing pilot sick calls, among other actions that hurt
operations and earnings."
Higgins notes the apparent "widescale 'work-to-book' operation"
by pilots -- in which pilots refuse to volunteer to cover extra
shifts -- might force United to cut back on flights... and that
will hurt profits.
Continued fears about the state of United's labor affairs may
have also played a role in another sharp drop Tuesday... in which
UAL stock fell another 15 percent, closing at $24.67. That far
surpasses the previous 15-month low of $27.85, according to
United isn't alone in taking a financial hit of late. Stock
prices throughout the airline industry have declined in the past
several days, due to record oil prices and continued investor
unease about the health of the US economy.
In United's case, however... it appears to have still another
problem to contend with, as well.