“As in other industries, like manufacturing or consumer goods, the focus is on more traditional financial metrics like pretax income, margins, return on capital
and total shareholder return,” said Andrew Goldstein, head of the executive compensation practice in North America for Willis Towers Watson.
“Fifteen years ago, airlines competed with each other over who could buy the most planes or
have the most routes,” said Jamie Baker, a top airline industry analyst at JPMorgan Chase.
Route to Air Travel Discomfort Starts on Wall Street -
By NELSON D. SCHWARTZMAY 28, 2017
When an unlucky passenger was violently dragged off a full United Airlines flight in Chicago in April, setting off a public-relations
nightmare for the company, the blame naturally fell on the cabin crew, the police and eventually airline executives.
“Airlines haven’t abandoned operational and customer-service metrics, but they are putting less emphasis on those factors.”
After a wave of bankruptcies and mergers that reshaped the airline industry, its profit margins have risen rapidly over the last five years.
“But I’ve been watching this for 30 years, and it’s never been as intense as it is today.”
Rich bonus packages for top executives are now largely tied to short-term income targets and fatter profit margins instead of customer service.
United’s stock has surged to more than $80 per share from $25 per share five years ago,
with profit margins rising to 13.6 percent from 3.7 percent over the same period.