United Reports Record On-Time Percentage, Jump in Fuel Costs, Huge Drop in Taxes
United Airlines reported its second quarter results late Tuesday, with profit dropping to $684 million, or 17% from the same period of last year. Yet shares were up 9% at midday on Wall Street on the earnings news, which was better than the expectations of analysts, but there are some interesting details in its earnings release:
Record On-Time Percentage
Without listing its on-time percentage anywhere in the 5,234-word report, United boasted:
- Ranked first among largest competitors in on-time departures in the quarter.
- Completed the best second-quarter on-time departure performance in United's history.
The most recent Bureau of Transportation Statistics release includes only on-time data through April 2018. In April, United reported a 83.9% on-time percentage — which is 5th place behind Hawaiian (87.7%), Delta (86.4%), regional airline Mesa (85.1%) and American Airlines (83.9%). So, it'll be interesting to see if United's claim to be the best holds up when the official May and June BTS statistics are released.
Yuuuge Tax Savings
In the depths of the financial statements, United disclosed that its effective tax rate fell from 35.5% in the first half of 2017 to 20.2% in the first half of 2018. That 43% reduction in its tax rate is credited to "the reduced federal corporate income tax rate as a result of the enactment of the Tax Cuts and Jobs Act (the 'Tax Act') in December 2017."
United's preliminary income tax expense for the first half of 2018 is $210 million. Applying the 35.5% tax rate to the pretax income of $1.041 billion would be a tax expense of $370 million. That means, assuming the same tax rate as the first half of 2017, United has saved $160 million due to the new tax law so far in 2018.
Note that United didn't follow Southwest and American Airlines in giving bonuses to its workers after the new tax law was enacted. However, it did try to sneakily slash employee bonuses by around $36 million before ultimately retreating on that effort.
Soaring Fuel Costs
You're not the only one feeling the pinch at the pump. Despite United's record on-time performance and drastic drop in taxes, its net income dropped nearly 17% year-over-year. And that's mostly because of soaring fuel costs. United's fuel costs jumped 43% in the same period, increasing costs by a whopping $721 million for the three-month period.
United's cost for airline fuel jumped from $1.62 per gallon on average from Q2 2017 up to $2.24 per gallon in Q2 2018 as it pumped 885 million gallons of jet fuel. The airline did get ever-so-slightly more efficient, increasing capacity by 4.3% while increasing fuel consumption by only 2.1%.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.