United Earnings Call 18 April

TWA772LR · Mon Apr 17, 2017 4:59 pm

United's 2017 Q1 earnings call is tomorrow morning. What can we expect? More domestic build up? A long awaited CSeries/737-10/MoM order/launch?

Please keep United's recent appearances in the media out of this thread. This is about the earnings call predictions/facts only.

32andBelow · Mon Apr 17, 2017 5:04 pm

I guarantee that will be a big topic of the call, why would you keep it out?

TWA772LR · Mon Apr 17, 2017 5:17 pm

32andBelow wrote:
I guarantee that will be a big topic of the call, why would you keep it out?

If it is a topic of the call then by all means discuss it. But those threads get out of hand very quickly and that is not the premise of this one.

TheGeordielad · Mon Apr 17, 2017 5:58 pm

How old are their B757s because I flew on 3 last year (NCL-EWR,EWR-SFO&EWR-NCL) and they felled tried and on one flight the IFE wasn't working.
Plus if the MOM is launched would United order it and how many would they order?

727LOVER · Mon Apr 17, 2017 6:00 pm

Most of the PMUA ones are gone. The PMCO ones started in 1994 or 1995 Cant remember if CO was getting THEM before the 735

LAXintl · Mon Apr 17, 2017 9:21 pm

Earnings are out.

> UAL reported first-quarter net income of $96 million, diluted earnings per share of $0.31, pre-tax earnings of $145 million and pre-tax margin of 1.7 percent.

http://newsroom.united.com/2017-04-17-U ... erformance

Regarding the event Oscar had the following to say:

"It is obvious from recent experiences that we need to do a much better job serving our customers. The incident that took place aboard flight 3411 has been a humbling experience. This will prove to be a watershed moment for our company, and we are more determined than ever to put our customers at the center of everything we do. We are dedicated to setting the standard for customer service among US airlines, as we elevate the experience our customers have with us from booking to baggage claim.”

Regarding overall environment Scott Kirby says:

“We saw positive trends in the revenue environment in the quarter and are optimistic about the year ahead. Looking forward, we expect second-quarter consolidated PRASM to be up 1% to 3%. This would mark the fifth straight quarter of sequential improvement and the first quarter of positive [year-over-year] unit revenue growth in two years.”

=

downdata · Mon Apr 17, 2017 11:39 pm

Basically quarterly net income down 70% from 500M to 145M from a year ago, due to fuel costs increase of 30% by 350M.

rnav2dlrey · Tue Apr 18, 2017 12:08 am

i just want to see a comprehensive fleet plan. there were rumors for the Q4 2016 call of a massive NB/WB order (remember that?!), which never materialized.

do i think we finally see that tomorrow? no. i think we'll hear more talk of "exploring the used aircraft market", and this time it might include widebodies (and maybe A321 from TK).

i'd like to hear something definitive about the A350 order, but the latest buzz is that there still isn't a resolution to UA's desire to cancel/defer/modify the order with airbus and/or rolls royce. i'd LOVE a c-series order, but i give that a 2% chance.

hopefully not all of the questioning revolves around UA3411. i would like to hear a questions asked about (a) zodiac and the delays with the polaris seat [which many of us anticipated], (b) any progress with boeing in terms of MoM, (c) any plans for a replacement for the pmUA pratt 757 fleet, especially since BOS-SFO seems to be all flatbed indefinitely and (d) more color on how UA expects to expand/compete at LAX.

jetmatt777 · Tue Apr 18, 2017 12:16 am

downdata wrote:
Basically quarterly net income down 70% from 500M to 145M from a year ago, due to fuel costs increase of 30% by 350M.

The airline also purchased the leases outright on 12 737's, paid down $346 million in debt, and purchased back $300 million in UAL stock.

Capital expenditures totaled $691 million in the quarter.

Sure profits are down compared to last year, but long term outlook was strengthened as debt was paid down, leases (monthly expenditures) were purchased outright, and shares were brought back in house.

I'd say it was a good quarter for United. Smaller short term profits in exchange for long term stability is fine with this employee.

United1 · Tue Apr 18, 2017 12:41 am

jetmatt777 wrote:
downdata wrote:
Basically quarterly net income down 70% from 500M to 145M from a year ago, due to fuel costs increase of 30% by 350M.

I'd say it was a good quarter for United. Smaller short term profits in exchange for long term stability is fine with this employee.

Yup...and they are still projecting a 2.2 billion dollar profit for the year and finally PRASM growth. Not bad at all...

727200 · Tue Apr 18, 2017 12:47 am

rnav2dlrey wrote:
i just want to see a comprehensive fleet plan. there were rumors for the Q4 2016 call of a massive NB/WB order (remember that?!), which never materialized.

do i think we finally see that tomorrow? no. i think we'll hear more talk of "exploring the used aircraft market", and this time it might include widebodies (and maybe A321 from TK).

i'd like to hear something definitive about the A350 order, but the latest buzz is that there still isn't a resolution to UA's desire to cancel/defer/modify the order with airbus and/or rolls royce. i'd LOVE a c-series order, but i give that a 2% chance.

hopefully not all of the questioning revolves around UA3411. i would like to hear a questions asked about (a) zodiac and the delays with the polaris seat [which many of us anticipated], (b) any progress with boeing in terms of MoM, (c) any plans for a replacement for the pmUA pratt 757 fleet, especially since BOS-SFO seems to be all flatbed indefinitely and (d) more color on how UA expects to expand/compete at LAX.

Remind me to just walk away from the company you are with since it is obvious traffic slowing and you want to go out on multi-billion dollar spending plan. That certainly defies logic unless your goal is to head straight into BK. It is clear capital expenditures are slowing which is pretty obvious to those that follow the industry, so why you would advocate large expenditures is beyond reason.

downdata · Tue Apr 18, 2017 12:49 am

jetmatt777 wrote:
downdata wrote:
Basically quarterly net income down 70% from 500M to 145M from a year ago, due to fuel costs increase of 30% by 350M.

The airline also purchased the leases outright on 12 737's, paid down $346 million in debt, and purchased back $300 million in UAL stock.

Capital expenditures totaled $691 million in the quarter.

Sure profits are down compared to last year, but long term outlook was strengthened as debt was paid down, leases (monthly expenditures) were purchased outright, and shares were brought back in house.

I'd say it was a good quarter for United. Smaller short term profits in exchange for long term stability is fine with this employee.

You are confusing financial performance and financial position. Capex or any other cash items does not have any impact on the P&L. If anything, the paydown in debt and ending of leases should have had a positive impact on the P&L due to the reduction of lease payment and interest expense.

That said, I never suggested anything as to the future financial health of the company, which will always be on a forward-looking basis.

MIflyer12 · Tue Apr 18, 2017 12:53 am

jetmatt777 wrote:
Sure profits are down compared to last year, but long term outlook was strengthened as debt was paid down, leases (monthly expenditures) were purchased outright, and shares were brought back in house.

I'd say it was a good quarter for United. Smaller short term profits in exchange for long term stability is fine with this employee.

The items you cite are uses of cash flow - not operating expense. They don't explain the poor margin.

If ALK isn't too weighed down with acquisition integration costs it may make more in pre-tax profit than UA 1q17 - a carrier nearly 4x its size.

LAXintl · Tue Apr 18, 2017 1:05 am

United results beat analyst estimates. $0.41 share vs $0.38 estimate.

United1 · Tue Apr 18, 2017 1:15 am

downdata wrote:
jetmatt777 wrote:
downdata wrote:
Basically quarterly net income down 70% from 500M to 145M from a year ago, due to fuel costs increase of 30% by 350M.

The airline also purchased the leases outright on 12 737's, paid down $346 million in debt, and purchased back $300 million in UAL stock.

Capital expenditures totaled $691 million in the quarter.

Sure profits are down compared to last year, but long term outlook was strengthened as debt was paid down, leases (monthly expenditures) were purchased outright, and shares were brought back in house.

I'd say it was a good quarter for United. Smaller short term profits in exchange for long term stability is fine with this employee.

You are confusing financial performance and financial position. Capex or any other cash items does not have any impact on the P&L. A company can borrow or pay down 1B in debt and it will not impact the net income other than the changes in net interest expense. If anything, the paydown in debt and ending of leases should have had a positive impact on the P&L due to the reduction of lease payment and interest expense (both P&L items).

That said, I never suggested anything as to the future financial health of the company, which will always be on a forward-looking basis. The key take out I can get the numbers is, for the past quarter, a disproportionate increase in fuel costs heavily impacted the Q1 results vs same time last year. The questions to ask then are did the increase in fuel price affect any other airlines to the same degree? Why was united not able to pass on the fuel costs increases through higher ticket prices? ...etc etc

To some extent, UA was able to pass costs along as they managed to increase revenue by a bit less than 3% (the only other major that has reported so far is DL and they had a drop in revenue of around 1%.) DL and UA both said the primary reason why profits dropped this quarter was due to fuel going up although there were other factors involved such as an increase in staff costs, higher TechOps costs and both had a higher rate of depreciation of assets this quarter.

As a kind of a random occurrence UA and DL both ended up paying the same amount per gallon this quarter $1.71

rnav2dlrey · Tue Apr 18, 2017 2:47 am

727200 wrote:
rnav2dlrey wrote:
i just want to see a comprehensive fleet plan. there were rumors for the Q4 2016 call of a massive NB/WB order (remember that?!), which never materialized.

do i think we finally see that tomorrow? no. i think we'll hear more talk of "exploring the used aircraft market", and this time it might include widebodies (and maybe A321 from TK).

i'd like to hear something definitive about the A350 order, but the latest buzz is that there still isn't a resolution to UA's desire to cancel/defer/modify the order with airbus and/or rolls royce. i'd LOVE a c-series order, but i give that a 2% chance.

hopefully not all of the questioning revolves around UA3411. i would like to hear a questions asked about (a) zodiac and the delays with the polaris seat [which many of us anticipated], (b) any progress with boeing in terms of MoM, (c) any plans for a replacement for the pmUA pratt 757 fleet, especially since BOS-SFO seems to be all flatbed indefinitely and (d) more color on how UA expects to expand/compete at LAX.

Remind me to just walk away from the company you are with since it is obvious traffic slowing and you want to go out on multi-billion dollar spending plan. That certainly defies logic unless your goal is to head straight into BK. It is clear capital expenditures are slowing which is pretty obvious to those that follow the industry, so why you would advocate large expenditures is beyond reason.

Where did I say I want UA to blow the bank on capex? The only order I said I wanted to see is one for the cseries. UA probably can't get the "name your own price" deal that DL got, but the efficiencies over the 737NG that UA had ordered made even fiscally conservative DL take the risk. UA has stated that it needs more domestic NB lift, and its lack thereof is impacting the bottom line. Might as well spend a little more to get a superior aircraft.

Rdh3e · Tue Apr 18, 2017 3:11 am

727200 wrote:
Remind me to just walk away from the company you are with since it is obvious traffic slowing

Can you point me to where traffic is slowing? From all available stats United's traffic is at a post-recession high and continuing to grow. United is also posting some of the best YOY unit revenue results so it's hard to reconcile your statement.

77H · Tue Apr 18, 2017 3:45 am

rnav2dlrey wrote:
727200 wrote:
rnav2dlrey wrote:
i just want to see a comprehensive fleet plan. there were rumors for the Q4 2016 call of a massive NB/WB order (remember that?!), which never materialized.

do i think we finally see that tomorrow? no. i think we'll hear more talk of "exploring the used aircraft market", and this time it might include widebodies (and maybe A321 from TK).

i'd like to hear something definitive about the A350 order, but the latest buzz is that there still isn't a resolution to UA's desire to cancel/defer/modify the order with airbus and/or rolls royce. i'd LOVE a c-series order, but i give that a 2% chance.

hopefully not all of the questioning revolves around UA3411. i would like to hear a questions asked about (a) zodiac and the delays with the polaris seat [which many of us anticipated], (b) any progress with boeing in terms of MoM, (c) any plans for a replacement for the pmUA pratt 757 fleet, especially since BOS-SFO seems to be all flatbed indefinitely and (d) more color on how UA expects to expand/compete at LAX.

Remind me to just walk away from the company you are with since it is obvious traffic slowing and you want to go out on multi-billion dollar spending plan. That certainly defies logic unless your goal is to head straight into BK. It is clear capital expenditures are slowing which is pretty obvious to those that follow the industry, so why you would advocate large expenditures is beyond reason.

Where did I say I want UA to blow the bank on capex? The only order I said I wanted to see is one for the cseries. UA probably can't get the "name your own price" deal that DL got, but the efficiencies over the 737NG that UA had ordered made even fiscally conservative DL take the risk. UA has stated that it needs more domestic NB lift, and its lack thereof is impacting the bottom line. Might as well spend a little more to get a superior aircraft.

I agree. Domestic travel is on the rise. The only narrowbody UA currently has on the books is the 73MAX9. The domestic lift UA needs to compete with the other legacies and ULCCs cannot be accomplished with the MAX9 alone. This said, UA can always amend that order to include MAX7/8 aircraft which some think will happen. That said, the MAX7 seems like a lot of aircraft for short domestic hops. The C Series, or upcoming Embraer E2 models seem better a better match. Then again, there are complexities and costs associated with bringing completely new types into the fleet. One reason why the MAX, and to a lessor extent the NEO are attractive are due to commonalities with current types being operated today.

With regards to traffic slowing, international traffic has slowed, not just for the US3 but around the global.

77H

jumbojet · Tue Apr 18, 2017 4:00 am

How about UA profit sharing, what did the employees get?

adamblang · Tue Apr 18, 2017 4:02 am

jumbojet wrote:
How about UA profit sharing, what did the employees get?

Profit sharing isn't divvied up on a quarterly basis.

jumbojet · Tue Apr 18, 2017 4:04 am

adamblang wrote:
jumbojet wrote:
How about UA profit sharing, what did the employees get?

Profit sharing isn't divvied up on a quarterly basis.

isn't it paid out during the Jan 1 to Mar 31 quarter?

what about the adjusted pre-tax income, how did DL do compared to UA?

d8s · Tue Apr 18, 2017 4:05 am

TheGeordielad wrote:
How old are their B757s because I flew on 3 last year (NCL-EWR,EWR-SFO&EWR-NCL) and they felled tried and on one flight the IFE wasn't working.
Plus if the MOM is launched would United order it and how many would they order?

The oldest is 1998 (N502UA) and the youngest (N19141) is a 2000 build

codc10 · Tue Apr 18, 2017 4:16 am

d8s wrote:
TheGeordielad wrote:
How old are their B757s because I flew on 3 last year (NCL-EWR,EWR-SFO&EWR-NCL) and they felled tried and on one flight the IFE wasn't working.
Plus if the MOM is launched would United order it and how many would they order?

The oldest is 1998 (N502UA) and the youngest (N19141) is a 2000 build

N502UA is a 1989 build (guessing that's a typo). I flew on 5302 last week and the new-ish interior certainly hid her age, but 27,000 cycles and 93,000 hours don't lie!

CONTACREW · Tue Apr 18, 2017 4:17 am

d8s wrote:
TheGeordielad wrote:
How old are their B757s because I flew on 3 last year (NCL-EWR,EWR-SFO&EWR-NCL) and they felled tried and on one flight the IFE wasn't working.
Plus if the MOM is launched would United order it and how many would they order?

The oldest is 1998 (N502UA) and the youngest (N19141) is a 2000 build

N502UA was delivered in 1989. The 752s delivered in 1998 are:

N29124, N12125, N17126, N48127, N17128, N29129, N19130, N34131, N33132, N17133, N595UA, N596UA.

Rdh3e · Tue Apr 18, 2017 4:22 am

jumbojet wrote:
adamblang wrote:
jumbojet wrote:
How about UA profit sharing, what did the employees get?

Profit sharing isn't divvied up on a quarterly basis.

isn't it paid out during the Jan 1 to Mar 31 quarter?

It's accrued throughout the year based on the financial results. The profit sharing for 2016 was accounted for in the 2016 results. The cash-flow would have been recorded this quarter but it would not impact these earnings.

I can't find the absolute number for Q1 but in the tables it shows it was down 83% YOY. In the investor update it also says they are estimating $100-130M of profit sharing accrual "through the second quarter".

hoya · Tue Apr 18, 2017 4:45 am

77H wrote:

I agree. Domestic travel is on the rise. The only narrowbody UA currently has on the books is the 73MAX9. The domestic lift UA needs to compete with the other legacies and ULCCs cannot be accomplished with the MAX9 alone. This said, UA can always amend that order to include MAX7/8 aircraft which some think will happen. That said, the MAX7 seems like a lot of aircraft for short domestic hops. The C Series, or upcoming Embraer E2 models seem better a better match. Then again, there are complexities and costs associated with bringing completely new types into the fleet. One reason why the MAX, and to a lessor extent the NEO are attractive are due to commonalities with current types being operated today.

With regards to traffic slowing, international traffic has slowed, not just for the US3 but around the global.

77H

Don't forget about the used A319s coming online. I suspect UA has determined that getting used A319s is better financially than placing a C-Series or MAX7 order. Smaller CAPEX, A319s already in fleet (and it's not that much more capacity than a C-Series), and the A319s coming on board have a lot of useful life left in them.

intotheair · Tue Apr 18, 2017 9:25 am

Should be interesting to see what happens. I hope Oscar is his candid self in talking about UA3411.

As for everything else, I'm not expecting any major fleet changes aside from perhaps a deferral of the first few A350 frames from 2018 until later (2019-2020, perhaps?)

Some more narrowbodies would be nice, whether it's in the form of more used A319s or a better articulation of the plans for the 61 deferred 737MAX, but I won't hold my breath.

commavia · Tue Apr 18, 2017 11:46 am

The earnings call presentation (now filed with the SEC and available on Unite'ds IR website) is interesting:

* United YTD cancellations number looks good versus big rivals - that's gotta be a not-so-subtle wink at Delta's operational issues earlier this month

* The "United is now able to take more load factor risk" chart is particularly interesting - saying United can now afford to rely less on cheaper advanced purchase fares and can hold back more inventory for close-in business bookings
* United expects PRASM to turn positive in 2Q17
* Commentary on region performance seems similar to and in line with Delta's, with domestic and Latin America strong (48% YOY unit revenue improvement in Brazil), and Atlantic and Pacific less so

Will be good to get the color commentary later today.

LAXdude1023 · Tue Apr 18, 2017 12:50 pm

commavia wrote:
The earnings call presentation (now filed with the SEC and available on Unite'ds IR website) is interesting:

* United YTD cancellations number looks good versus big rivals - that's gotta be a not-so-subtle wink at Delta's operational issues earlier this month
* The "United is now able to take more load factor risk" chart is particularly interesting - saying United can now afford to rely less on cheaper advanced purchase fares and can hold back more inventory for close-in business bookings
* United expects PRASM to turn positive in 2Q17
* Commentary on region performance seems similar to and in line with Delta's, with domestic and Latin America strong (48% YOY unit revenue improvement in Brazil), and Atlantic and Pacific less so

Will be good to get the color commentary later today.

If Latin America is strong, that's good news for Houston.

TWA772LR · Tue Apr 18, 2017 3:42 pm

I noticed in the "Statistics" section of the report on http://newsroom.united.com/2017-04-17-U ... erformance that the regional ops were (on average) resulted in higher yield per passenger mile and passenger revenue per mile than mainline. I'm still a novice so could someone explain this for me?

DoctorVenkman · Tue Apr 18, 2017 3:48 pm

TWA772LR wrote:
I noticed in the "Statistics" section of the report on http://newsroom.united.com/2017-04-17-U ... erformance that the regional ops were (on average) resulted in higher yield per passenger mile and passenger revenue per mile than mainline. I'm still a novice so could someone explain this for me?

Regional flights are much shorter on average than mainline flights, but the ticket price is not necessarily lower. Ticket prices are driven by supply and demand; the airline will charge th most it thinks it can get away with and still fill the plane. Due to less competition, regional flights can sometimes cost more than a mainline flight that goes twice as far.

edit: Look at the average stage length for mainline vs. regional. Mainline's average stage length is 1,802 miles vs. 573 miles for regional. So mainline flights are over 3x longer on average - which means higher fuel and crew costs. Yet I doubt the average mainline ticket is over 3x the price of a regional ticket.

LAXintl · Tue Apr 18, 2017 4:11 pm

Regional (and other short haul ops) RASM tends always to be high due higher fares for the stage length.

The offset obviously CASM is also higher with shorter segments.

a/c dxer · Tue Apr 18, 2017 4:20 pm

Rdh3e wrote:
jumbojet wrote:
adamblang wrote:
Profit sharing isn't divvied up on a quarterly basis.

isn't it paid out during the Jan 1 to Mar 31 quarter?

It's accrued throughout the year based on the financial results. The profit sharing for 2016 was accounted for in the 2016 results. The cash-flow would have been recorded this quarter but it would not impact these earnings.

I can't find the absolute number for Q1 but in the tables it shows it was down 83% YOY. In the investor update it also says they are estimating $100-130M of profit sharing accrual "through the second quarter".

One reason for being down 83% is due to spring being in the 2nd quarter I stead of 1st quarter like last year.

TWA772LR · Tue Apr 18, 2017 4:25 pm

DoctorVenkman wrote:
TWA772LR wrote:
I noticed in the "Statistics" section of the report on http://newsroom.united.com/2017-04-17-U ... erformance that the regional ops were (on average) resulted in higher yield per passenger mile and passenger revenue per mile than mainline. I'm still a novice so could someone explain this for me?

Regional flights are much shorter on average than mainline flights, but the ticket price is not necessarily lower. Ticket prices are driven by supply and demand; the airline will charge th most it thinks it can get away with and still fill the plane. Due to less competition, regional flights can sometimes cost more than a mainline flight that goes twice as far.

edit: Look at the average stage length for mainline vs. regional. Mainline's average stage length is 1,802 miles vs. 573 miles for regional. So mainline flights are over 3x longer on average - which means higher fuel and crew costs. Yet I doubt the average mainline ticket is over 3x the price of a regional ticket.

But the higher capacity of a mainline flight would offset the higher cost, right? At what point would it become advantageous to operate a mainline aircraft versus regional, aircraft performance aside of course.

DoctorVenkman · Tue Apr 18, 2017 4:46 pm

TWA772LR wrote:
DoctorVenkman wrote:
TWA772LR wrote:
I noticed in the "Statistics" section of the report on http://newsroom.united.com/2017-04-17-U ... erformance that the regional ops were (on average) resulted in higher yield per passenger mile and passenger revenue per mile than mainline. I'm still a novice so could someone explain this for me?

Regional flights are much shorter on average than mainline flights, but the ticket price is not necessarily lower. Ticket prices are driven by supply and demand; the airline will charge th most it thinks it can get away with and still fill the plane. Due to less competition, regional flights can sometimes cost more than a mainline flight that goes twice as far.

edit: Look at the average stage length for mainline vs. regional. Mainline's average stage length is 1,802 miles vs. 573 miles for regional. So mainline flights are over 3x longer on average - which means higher fuel and crew costs. Yet I doubt the average mainline ticket is over 3x the price of a regional ticket.

But the higher capacity of a mainline flight would offset the higher cost, right? At what point would it become advantageous to operate a mainline aircraft versus regional, aircraft performance aside of course.

You are conflating two things: (1) stage length and (2) aircraft type.

For (1), imagine EWR-SFO and EWR-ORD with the exact same aircraft flying the exact same passengers paying the same average fare. EWR-ORD will have a much higher PRASM because it is carrying the same payload a much shorter distance.

For (2), imagine a 737 and a 777 both flying EWR-SFO. If both planes are full and each customer paid the same average fare to get on the flight, then both flights have the same PRASM. However, the more efficient plane will have a lower CASM and thus be more profitable. Conversely, if there are only 100 passengers on the flight, then the 737 would have a much higher PRASM than the 777 because the 777 has the same amount of dollars spread over more seat-miles.

These are simplified examples to get the point across. The primary reason we see PRASM higher in regional airlines is because of (1), not (2).

cledaybuck · Tue Apr 18, 2017 5:10 pm

a/c dxer wrote:
Rdh3e wrote:
jumbojet wrote:

isn't it paid out during the Jan 1 to Mar 31 quarter?

It's accrued throughout the year based on the financial results. The profit sharing for 2016 was accounted for in the 2016 results. The cash-flow would have been recorded this quarter but it would not impact these earnings.

I can't find the absolute number for Q1 but in the tables it shows it was down 83% YOY. In the investor update it also says they are estimating $100-130M of profit sharing accrual "through the second quarter".

One reason for being down 83% is due to spring being in the 2nd quarter I stead of 1st quarter like last year.

Do you mean Easter? That may contribute a little, but no where near 83%

boilerla · Tue Apr 18, 2017 8:13 pm

cledaybuck wrote:
a/c dxer wrote:
Rdh3e wrote:
It's accrued throughout the year based on the financial results. The profit sharing for 2016 was accounted for in the 2016 results. The cash-flow would have been recorded this quarter but it would not impact these earnings.

I can't find the absolute number for Q1 but in the tables it shows it was down 83% YOY. In the investor update it also says they are estimating $100-130M of profit sharing accrual "through the second quarter".

One reason for being down 83% is due to spring being in the 2nd quarter I stead of 1st quarter like last year.
Do you mean Easter? That may contribute a little, but no where near 83%

While I'm not saying it matters, spring break is usually tied to Easter in many places. For example LA Unified has been off the past week, and many other schools are off this week. But that shouldn't be an 83% difference.

United1 · Tue Apr 18, 2017 9:50 pm

boilerla wrote:
cledaybuck wrote:
a/c dxer wrote:

One reason for being down 83% is due to spring being in the 2nd quarter I stead of 1st quarter like last year.
Do you mean Easter? That may contribute a little, but no where near 83%

While I'm not saying it matters, spring break is usually tied to Easter in many places. For example LA Unified has been off the past week, and many other schools are off this week. But that shouldn't be an 83% difference.

Spring break is part of it although UA actually generated more revenue this Q1 than last years Q1.

Really what it comes down to is fuel creeping up, an increase in labor costs, an increase in depreciate and maintenance costs. All of that being said UA had a very solid quarter and accomplished a lot financially and operationally.

jumbojet · Tue Apr 18, 2017 10:54 pm

why was United stock down over 4% today?

jetmatt777 · Tue Apr 18, 2017 11:24 pm

jumbojet wrote:
why was United stock down over 4% today?

United is planning on adding domestic capacity. Stock market wants no capacity growth to keep fares high.

United1 · Tue Apr 18, 2017 11:34 pm

jetmatt777 wrote:
jumbojet wrote:
why was United stock down over 4% today?

United is planning on adding domestic capacity. Stock market wants no capacity growth to keep fares high.

Exactly...as UA is finally getting positive PRASM growth they are increasing ASMs to keep up with demand and grow the airline.

For the year UA is planning 2.5-3.5% consolidated systemwide growth...domestic will be up 3.5-4.5% year over year (6% IIRC domestic growth next quarter.) Some will be new routes but for the most part it's simply going to be UA pulling RJs out of markets that can support mainline jets and redeploying those RJs to more appropriate markets.

jbs2886 · Tue Apr 18, 2017 11:41 pm

United1 wrote:
jetmatt777 wrote:
jumbojet wrote:
why was United stock down over 4% today?

United is planning on adding domestic capacity. Stock market wants no capacity growth to keep fares high.

Exactly...as UA is finally getting positive PRASM growth they are increasing ASMs to keep up with demand and grow the airline.

For the year UA is planning 2.5-3.5% consolidated systemwide growth...domestic will be up 3.5-4.5% year over year (6% IIRC domestic growth next quarter.) Some will be new routes but for the most part it's simply going to be UA pulling RJs out of markets that can support mainline jets and redeploying those RJs to more appropriate markets.

Adding more capacity than previously planned. IIRC it goes from 1.5-2.5% domestic to 3.5-4.5%...that's a big increase over what was previously planned.

Rdh3e · Wed Apr 19, 2017 12:20 am

jbs2886 wrote:
Adding more capacity than previously planned. IIRC it goes from 1.5-2.5% domestic to 3.5-4.5%...that's a big increase over what was previously planned.

That was communicated a month ago in an investor update, so that is not what is driving anything today.

commavia · Wed Apr 19, 2017 12:27 am

I think by far the most noteworthy exchange from the entire earnings call was Kirby's passionate defense of network capacity, and fairly blunt appraisal of what he apparently views as analyst-driven, and ultimately counter-productive, capacity retrenchment during the Smisek era:

"And you guys used to get on this earnings call and beat them up about why aren't your financials good. And you gave them a cure for that, which was cut capacity, cut capacity, cut capacity and it just made the problem worse. And despite taking the same medicine quarter-after-quarter as the numbers got worse and worse and worse that was part of the problem when the airline was cutting capacity and taking regional jets out of places ... like Rochester, Minnesota and redeploying them in places like Newark to Atlanta, in order to keep capacity low. That was driving margins lower."

n471wn · Wed Apr 19, 2017 12:35 am

Congrats to United management for growing this airline with a revised capacity increase. Take note SWA that you need to buy more used 737-700's as 75 planes you are now flying will be gone by Oct 1st.

United1 · Wed Apr 19, 2017 12:48 am

commavia wrote:
I think by far the most noteworthy exchange from the entire earnings call was Kirby's passionate defense of network capacity, and fairly blunt appraisal of what he apparently views as analyst-driven, and ultimately counter-productive, capacity retrenchment during the Smisek era:

"And you guys used to get on this earnings call and beat them up about why aren't your financials good. And you gave them a cure for that, which was cut capacity, cut capacity, cut capacity and it just made the problem worse. And despite taking the same medicine quarter-after-quarter as the numbers got worse and worse and worse that was part of the problem when the airline was cutting capacity and taking regional jets out of places ... like Rochester, Minnesota and redeploying them in places like Newark to Atlanta, in order to keep capacity low. That was driving margins lower."

Yup...and this more than anything is why the stock went lower today. Investors dont like to hear we are no longer running an airline completely focused on returning value to you.

727200 · Wed Apr 19, 2017 12:57 am

I'm surprised no one on this site mentioned the statements UA is looking at additional used WB aircraft because prices are so low and the manufacturer's are feeling this. In the back of my mind I was thinking used? I wouldn't be surprised if they squeeze Boeing for some more planes; Airbus is not a factor as they apparently are moving away from that manufacturer.

intotheair · Wed Apr 19, 2017 12:58 am

Still seems like a great strategy to increase domestic capacity though, especially after UA has done nothing but cut domestic capacity for more than a decade. And in that timeframe, look at the much stronger positions AA, DL, and WN are in at LAX, ORD/MDW, JFK/EWR, and DEN.

AVENSAB727 · Wed Apr 19, 2017 1:38 am

According to Scott Kirby, Houston has actually seen the most improvement in PRASM, out of all the hubs, even though they have lost capacity, and UA plans to re-bank Houston later this year which will give them the platform to grow IAH more and improve PRASM even more. This is good news for IAH from UA, considering how rough 2016 was for the IAH hub.

Rdh3e · Wed Apr 19, 2017 3:10 am

United1 wrote:

Yup...and this more than anything is why the stock went lower today. Investors dont like to hear we are no longer running an airline completely focused on returning value to you.

The tenor seemed more akin to "you don't know how to create value and your advice didn't help before" than anything.

AVENSAB727 wrote:
According to Scott Kirby, Houston has actually seen the most improvement in PRASM, out of all the hubs, even though they have lost capacity

Shrinking makes it easier to improve PRASM. Frankly if Houston wasn't doing better after all the cuts that would be really bad. Growing makes it relatively harder, although not impossible, to increase PRASM.

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