This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

United's On-Time Arrival Rate Rises - Could Share Price Follow?

CHICAGO -- ( TheStreet) -- United's (UAL) operational performance has improved dramatically since July, when the carrier's 64% on-time arrivals rate was the worst in the industry.

In August, the rate, which measures the share of domestic arrivals within 14 minutes of schedule, increased to 72.2%. For September, it is more than 80%. On Monday, it was 92%.

"Running above goal, we're delivering better on-time performance," United said on Friday, Sept. 21, in an internal newsletter for employees, noting: "If we continue to improve our performance, co-workers could receive a September payout through our on-time bonus program."

The improved performance could signal the impending conclusion of an ugly chapter in the story of implementation of the 2010 merger between United and Continental. The operational impact has been severe, resulting in reduced unit revenue for several months: it was perhaps best illustrated by a July incident in which 300 passengers were stranded in Shanghai for three days. That month, S&P Capital IQ analyst Jim Corridore wrote that "UAL's merger integration issues are leading it to underperform peers.

"While we think long term the merger will bring great benefits, we have less confidence in management's ability to manage the integration in the near term," Corridore said.

United's lagging merger integration has kept a lid on its share price, which is up about 4% this year. During the same period, shares in peer Delta (DAL) have gained 10%, while the NYSE Airline Arca Index (XAL) is up about 15%. Conceivably, the improved operations are signaling that merger integration problems have largely been addressed.

For the summer schedule, United sought for the first time to fully merge operations of the two airlines. In July, after the shortcomings of that effort became apparent, United enhanced preventive maintenance, increased the number of spare aircraft and adjusted its arrival and departure procedures.

Now the industry's focus has shifted to the poor operational performance at American (AAMRQ.PK), at which delays and cancellations have surged recently, largely as a result of an increase in pilot maintenance requests.

Aviation consultant Robert Mann said United's problems were not atypical.

"Airlines go through this in mergers," he said. "Even though they have single operating certificates, sometimes it's two years before schedule planning groups produce a single consolidated schedule," he said. "And if you take two philosophies that are different in terms of (building in extra time and more spare aircraft), and if you choose the more aggressive of the two, then you've hung the other one out to dry."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs