Earnings Roundup: Profits rise at United despite damaging video

Profits rise at United despite damaging video

So much for the outrage directed at United Airlines.

On Tuesday, the carrier released its first financial statement that included the period after security officers forcibly removed a 69-year-old passenger, Dr. David Dao, from a plane. The incident left him bloodied and disheveled and left United facing widespread calls for a boycott. Nearly three months later, it appears all the public anger has not hurt the company's bottom line.

United reported a profit of $818 million in the most recent quarter, ending in June, up 39 percent compared with last year. Sales rose, too, as more customers booked flights with the carrier, amid rising demand overall for air service. In a separate report this month, United said it had more than 71 million passengers during the first half of the year, up 4.2 percent compared with last year.

The results point to an underlying principle about the airline business: Passengers, by and large, look for the most convenient and cheapest fares, not which airlines claim to offer the best service. The case of Dao and the initial public reaction put that principle to the test. A video of airport security officers dragging him off a flight on April 9 ricocheted around the world after another passenger posted it to Twitter. Dao's lawyer said the removal, to make his seat available to a United employee, had left Dao with a broken nose, a concussion, two knocked-out teeth and sinus problems.

The event became a public-relations nightmare for United, generating weeks of bad news. Elected officials in Washington threatened consequences for United, and customers promised to boycott the carrier. United's chief executive, Oscar Munoz, did not get an expected promotion to board chairman.

Dao later settled with United for an undisclosed amount.

"It's very difficult at this point in time for consumers to exact a penalty against airlines that have exhibited poor customer service" or been involved in a high-profile situation like Dao's removal, said John Kwoka Jr., a Northeastern University economics professor who has advised state attorneys general on airline mergers.

Pinnacle Bank boosts second quarter profits

Pinnacle Financial Partners Inc., the parent company of Tennessee's second biggest bank, boosted its second quarter earnings by 9.6 percent from a year ago to $43.1 milion, or 80 cents per share, after closing its merger in June with the Bank of North Carolina.

Earnings, adjusted for costs related to mergers and acquisitions, were 84 cents per share. The results beat Wall Street expectations by 4 cents per share.

The Nashville-based banking firm, which acquired the former CapitalMark Bank in Chattanooga two years ago, posted revenue of $158.8 million in the period.

"Second quarter results continued to show very strong growth momentum," said M. Terry Turner, Pinnacle's president and chief executive officer. "We are well underway in executing our integration process (with BNC Bancorp., which closed on June 16) in terms of brand, technology and, more importantly, culture."

During the second quarter, Pinnacle boosted loan volume by $478 million, up 22.1 percent from a year ago.

CSX boosts profits under its new CEO

CSX Corp. delivered a 15 percent improvement in second-quarter profit as the railroad continues to restructure under its new CEO.

The Jacksonville, Fla.-based company said Tuesday it earned $510 million net income, or 55 cents per share. That's up from $445 million, or 47 cents per, share a year ago.

The railroad's results were weighed down by $122 million in restructuring charges related to changes CEO Hunter Harrison has made as he works to streamline operations and impose tighter schedules for trains. Without those charges, the railroad said it would have reported earnings per share of 64 cents.

The results still topped the adjusted 59 cents per share that the 11 analysts surveyed by Zacks Investment Research expected on average.

"Although there still remains a lot to be done, we are confident that these initiatives will drive improved customer service, greater resource efficiency and superior shareholder value," Harrison said.

The freight railroad's revenue grew 8 percent to $2.93 billlion as it hauled 2 percent more freight.

CSX's board approved spending another $500 million on repurchasing its own shares to boost the plan to $1.5 billion.

The railroad reiterated its outlook for a 25 percent improvement over last year's earnings per share of $1.81.

The 72-year-old Harrison was hired by CSX after pressure from the Mantle Ridge hedge fund that owns 5 percent of the railroad. Harrison previously led turnarounds of Canadian Pacific and Canadian National railroads.

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