There is little chance United Airlines will be able to recoup the millions in revenue lost during the Hurricane Harvey.
Several months removed from a public-relations disaster that nevertheless failed to dent its bottom line, United Airlines is poised to lose millions because of Hurricane Harvey.
According to a report published by Cowen & Co. analyst Helane Becker on Tuesday, the financial toll from the hurricane on United could surpass $265 million.
United Airlines is by far the largest tenant of Houston George Bush Intercontinental Airport, which closed over the weekend and is not scheduled to reopen until Thursday. The airline's operations at the airport account for 17% of its total capacity. (Before its 2010 merger with United, Continental Airlines was based in Houston.)
While Southwest and Spirit also face losses as a result of the storm, United is exposed to a higher degree. Becker expects Southwest to take a $77 million financial hit, with Spirit likely to lose $11 million.
Further, the analyst does not expect United to be able to recoup much of its lost revenue. Like all major airlines operating in Houston, United offered free refunds and rebookings to customers on flights canceled because of the storm. But Becker expects many of those customers to forgo traveling altogether.
In the report, Becker wrote:
"We assume the airports in the area will be closed for seven days and expect relatively little chance to recoup the lost revenue as the impact to people in the region could be profound (justifiably difficult to go on vacation after your house was flooded or the roof torn off). In addition, we expect school closures, and it is possible future vacations will be canceled to make up the lost classroom time. Given Houston is a major hub for United, they will likely be the most impacted by the storms."
In April, video surfaced of a passenger named David Dao being forcibly removed from one of the United's planes in Chicago. The public backlash forced CEO Oscar Munoz to institute a series of passenger-friendly policies aimed at preventing such an event from happening again.
Even though the incident turned United into the butt of seemingly every joke about poor customer service for a few months, it didn't actually harm the airline's bottom. In fact, United had a great second quarter, with profits up 39%.
For United and its Houston-based employees, Harvey will prove to be much more devastating. In addition to lost business, the widespread destruction will affect employees' ability to return to work even after the airport reopens.
For its part, United sent three of its brand-new Boeing 777-300ER jets to Houston over the weekend. The wide-body airliners were filled with emergency supplies and more than 100 employees to help with relief efforts. In addition, United donated $200,000 to aid Texas communities affected by the hurricane.