Officially, United Airlines is:
United Continental Holdings, Inc. and Subsidiary Companies
United Air Lines, Inc. and Subsidiary Companies
Continental Airlines, Inc. and Subsidiary Companies
According to the United Airlines 10-K form on file with the Securities and Exchange Commission dated February 22, 2012:
“With key global air rights in the U.S., Asia-Pacific, Europe, Middle East, Africa, and Latin America, UAL has the world’s most comprehensive global route network. UAL, through United and Continental and their regional carriers, operates more than 5,600 flights a day to more than 370 U.S. domestic and international destinations from the Company’s hubs at Newark Liberty International Airport (“Newark Liberty”), Chicago O’Hare International Airport (“Chicago O’Hare”), Denver International Airport (“Denver”), George Bush Intercontinental Airport (“Houston Bush”), Hopkins International Airport (“Cleveland Hopkins”), Los Angeles International Airport (“LAX”), A.B. Won Pat International Airport (“Guam”), San Francisco International Airport (“SFO”) and Washington Dulles International Airport (“Washington Dulles”). Including its regional operations, United operates approximately 3,200 flights a day to more than 235 U.S. domestic and international destinations based on its annual flight schedule as of January 1, 2012. Including its regional operations, Continental operates approximately 2,400 flights a day to more than 280 U.S. domestic and international destinations based on its annual flight schedule as of January 1, 2012.”
The primary audience for this special report is investors currently holding United Airlines stock and future investors contemplating purchasing United Airlines stock traded on the New York Stock Exchange under the stock code UAL. I am writing this at 3:34 PM Eastern Standard Time on Saturday, October 6, 2012 when the price quoted on the United Airlines investor page is $21.07. Readers going to the Investor Page for United Airlines are provided price updates when the New York Stock Exchange is open for business. However, sophisticated investors are well aware that given the global nature of financial markets and relatively new financial instruments available to them, such as future trading, it is possible to profit 24-7 from good financial advice.
Hence, before giving advice, this disclaimer. I do not own any stock in United Airlines, nor any stock in any airlines, nor any stock at all. While I have published investment advice for Changing Times Magazine on electric utility stocks and while I have worked as a consultant to the Securities and Exchange Commission, I have no formal training as an investment adviser.
My advice is based on my experience as a dissatisfied customer of United Airlines, on information available to me on the Internet, and through the kind of professional journalistic curiosity which resulting in my receiving funding from the Fund for Investigative Journalism.
My basic advice to long-term investments is that in the long-term United Airlines, now the largest airline carrier in the world (as measured by passenger traffic), will fail. I base this advice not only on my experience as a passenger but also on the explanations provided by United’s excellent employees who are almost certainly the company’s major resource.
What is endangering United’s future is the failing of Chief Executive Officer Jeffery A. Smisek and his management team at the company’s Chicago headquarters to efficiently integrate its regional carrier acquisitions over the past 5 years, to upgrade computer facilities among regional providers so that information passes seamlessly and so that passengers using United Airlines to book flights and make arrangements, special or otherwise, can be reassured that United will pass on critical information to United employees who are actually doing the work and that the individuals involved with providing United service are actually accountable to United, rather than explaining, as a supervisor at Wisconsin Airways explained, that he is not a United employee, that he is simply responsible for baggage at Dulles Airport going to a regional United-owned carrier and complaints as to his behavior (or indeed compliments) should not be directed to United Airlines.
I have some caveats regarding my advice to investors to be bearish in the long-term to United Airlines. I would not suggest you sell your stock immediately, but to wait for a healthy time to sell. I would also suggest that you consider some of the caveats (the reasoning behind my bearish suggestions) before following my advice.
1. If you assume that United’s feature is secure because it probably does a fine job of serving major international airports flying a fleet of wide bodied airplanes, then buy don’t sell.
2. I assume that the future of air travel depends upon a company’s ability to serve small and medium-sized airports, such as the ones I used last week and the week before at State College PA and Raleigh Durham (RDU). I believe that the future depends on lucrative and potentially lucrative airports such as RDU to serve passengers adequately. But if you believe that service among major international airports such as Kennedy, San Francisco, Paris, and London is sufficient, then buy and don’t sell.
3. I believe it is dangerous for a company to neglect rural, regional, and local markets such as State College and RDU. I believe that failure to provide dependable service for passengers who buy their tickets from United Airlines because of communication failures with local companies owned by United is a bad sign.
4. I believe that failure to understand and deliver on service to passengers who have special needs will have significant long-term negative consequences as the largest population in the history of the United States is retiring, at the rate of 10,000 a day (by one account).
5. If I had money to invest in the future, based on the assumptions I have made, I would cautiously sell United Stock, sell United futures on the commodity markets, and investigate other carriers.
My advice will continue after I get a second wind. Note: As I write my appeal posted yesterday on Google+ that United’s CEO hire me appears on the first page of a United Airlines Google search: https://plus.google.com/106671486059166564520/posts/PTJSUpuWLXe.
Perhaps, United’s corporate officers may be therefore encouraged to reform.
Whatever happens, I will let you know.
Plus: Getting there is half the fun of traveling:
2. Squeezing on the plane
“..within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines‘ stock price to suffer a mid-flight stall, and it plunged by 10 per cent, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars.”