It was always going to be a rough year for United Airlines. Although it charges an arm and a leg for a small beer, fuel prices have been going up higher than their 747s and a recession means less people wanted to fly.
However, a cost cutting move to improve the company’s computer systems is being blamed for a lot of United’s reported $448 million net loss.
United moaned that computer outages and glitches were one of the main things that were proving the most costly.
United merged with Continental Airlines in 2010 to create the world’s largest airline. But it hit a snag when it tried to merge two independent computer systems into one integrated network.
One of the systems helped predict how many tickets it should sell, and another tracked passenger information. The company did its best to make sure there was not too much trouble. The airline had practiced extensively for the switch. It even decided not to do things like underselling flights.
In early March, the computer migration process created delays that left many customers stranded for days. It caught everyone on the hop. Even the Chicago Tribune reported that the merger was flawless before having to replace the story with one which indicated it all had gone tits up.
CEO Jeff Smisek said that there were things that were happening which shouldn’t happen because of computer problems.
“We weren’t able to deliver the level of customer service that we wanted and that our customers have come to expect,” he said. As a result the company’s losses were 20 percent more than Wall Street expected.
Smisek said the changes are still worth it. United can now schedule planes freely around its network, matching the right plane to the right route, and it can market them all under the United name. But that will not pay off until future quarters.