There is no winning back premium/corporate customers. They are history for all airlines. The only way to generate more revenue is to dump class segregation/loyalty programs and go all-in al-a-carte, This requires huge amounts of IT investments, but once in place, they can print money.

Chauffeur
Check-in Greeting
Lounge Access
Bags
Seat type
Inflight Greeting
Meal Type
Amenity Kit
PJs

Passengers can pick any combination they want and pay for it.

I agree that Wall Street is focused more on short term rather than long term. However, the question is whether or not ua current expansion is in the right places. Their efforts of dumping excessive capacity from north east to Florida to fight spirit with basic economy is what brings down the yields. That will not draw the high revenue flyers. Their basic economy effort has only resulted in lost revenue that Scott Kirby himself has admitted to. You can't expand just for the sake of expanding.

FlyHossD wrote:

exunited wrote:

Winning back the high end customers that fled during the disastrous smisek / "do everything the co way" era will cost huge amounts of money and take a long time. Planes are full but not with the proper mix anymore. Kirby has said this before and that the BOD is keenly aware this is a long term project and has given him and Oscar the green light to fix. Chasing earning for next quarter mentality to maximize the CEO's bonus at the expense of the long term health is no longer in play. Kirby will either be proven right, or shown the door and in the meantime, the usual UA haters will have a field day as UA rebuilds.

For the most part, that's a very good post. But you're missing one key point - Smisek's way was not the "the co way" - it was the Smisek way. While he came from CO, you should remember that he was CEO there for only about 18 weeks before pulling the trigger on the merger with UAL. He was despised by many at CO and all those years at CO under Bethune and Brenneman seem to have been wasted on him.

The Smisek way was far too focused on costs at the exclusion of revenue, such as his decision to pull out of JFK. UAL will pay the price for that myopic vision for years to come.

I do agree with you for the most part on Smisek, however, I think that the point that he was trying to make is still valid. CO and UA were VERY different when it came to the premium passenger. United had built an airline around giving the best most loyal customers the world and that is why United had more of these high value passengers than any of the other major airlines. CO had nothing like this and therefore did not understand the importance of these customers and the programs dedicated to them. Rather than listen to the managers running these programs at United and looking at the numbers with an open mind Smisek looked at them through a CO looking glass and with the CO model the numbers didn't add up.

tphuang wrote:

I agree that Wall Street is focused more on short term rather than long term. However, the question is whether or not ua current expansion is in the right places. Their efforts of dumping excessive capacity from north east to Florida to fight spirit with basic economy is what brings down the yields. That will not draw the high revenue flyers. Their basic economy effort has only resulted in lost revenue that Scott Kirby himself has admitted to. You can't expand just for the sake of expanding.

Are they? I mean, you could go through the list of investors and find their buys, sells, holds, and trades. The key investors that matter at UAL are strong, institutional investors, and short term isn't their plan.

dtw2hyd wrote:

There is no winning back premium/corporate customers.

I agree with that part of your post. UA will never be able to win back ALL of the premium customers who left the airline because the things that got us those passengers in the first place are gone and too far gone to ever come back. The other problem is that those customers didn't just go to one place because there was no single place for them to go, the only other airline that had anything like United for these passengers was AA but even that wasn't like what UA did for these passengers.

FlyHossD wrote:

exunited wrote:

Winning back the high end customers that fled during the disastrous smisek / "do everything the co way" era will cost huge amounts of money and take a long time. Planes are full but not with the proper mix anymore. Kirby has said this before and that the BOD is keenly aware this is a long term project and has given him and Oscar the green light to fix. Chasing earning for next quarter mentality to maximize the CEO's bonus at the expense of the long term health is no longer in play. Kirby will either be proven right, or shown the door and in the meantime, the usual UA haters will have a field day as UA rebuilds.

For the most part, that's a very good post. But you're missing one key point - Smisek's way was not the "the co way" - it was the Smisek way. While he came from CO, you should remember that he was CEO there for only about 18 weeks before pulling the trigger on the merger with UAL. He was despised by many at CO and all those years at CO under Bethune and Brenneman seem to have been wasted on him.

The Smisek way was far too focused on costs at the exclusion of revenue, such as his decision to pull out of JFK. UAL will pay the price for that myopic vision for years to come.

Smisek was a co man for many, many years and was recruited by the God-like Gordo Buffoon himself. Distancing his ties with co does your argument no good. smisek brought with him legions of inept co managers and quickly replaced the existing UA people with "like minded" co people. These are FACTS, not opinion and to not own this being one of the ex-cons is just dishonest. Oscar and Kirby will need a lot of time to undo this mess and Wall street wants their payday yesterday, hence the problems of today. UA's problems were caused by the merger with co and the mentality it brought with it.

caverunner17 wrote:

jumbojet wrote:

Varsity1 wrote:

The domestic US market is outperforming international flying at the moment. UA is underexposed domestically and over exposed internationally.

Can anyone say; IAH-SYD, LAX-SIN, which by the way, haven't even started up yet. What is UA thinking? Once those flights start up, I would imagine things will only get worse.

This. Those SIN flights I just don't get. Although they may be filling the front, the Y fares in the back are absolute trash. I'm seeing sub $700 fares to SIN from ORD connecting through SFO or LAX in November. UA is getting into the ULH game with a crappy product compared to competitors and trash Y fares.

You do realise that just because you see one fare doesn't mean that all the other seats are sold at that same fare, right? That's a marketing fare and there are so many other fare classes to follow. Simply exasperating...

CriticalPoint wrote:

caverunner17 wrote:

jumbojet wrote:

Can anyone say; IAH-SYD, LAX-SIN, which by the way, haven't even started up yet. What is UA thinking? Once those flights start up, I would imagine things will only get worse.

This. Those SIN flights I just don't get. Although they may be filling the front, the Y fares in the back are absolute trash. I'm seeing sub $700 fares to SIN from ORD connecting through SFO or LAX in November. UA is getting into the ULH game with a crappy product compared to competitors and trash Y fares.

So you have personally seen the books at United? You have seen revenue management and know that United gets trash fares in Y on the SIN flights? You know everything?

You can do the math. Look at fuel costs per average pax weight for a stage length and then look at average crew costs and divide them by the number of pax.

I see right $469 on UA for EWR-LAX-SIN-SFO-LAX. Remove the $102 in taxes, that's $184 each way left for the airline. That's for a 6 hour flight AND a 17.5 hour flight, each way. There is zero chance that they are making much, if any money on that pax, so yes, the yield is trash, assuming they aren't even losing money there.

ual747den wrote:

exunited wrote:

You need to stop. The lack of maturity regarding this subject is absurd. And the continual histrionic and grandiose memories of the former companies is ridiculous. What do you need to make your hurt feelings go away? Does it take everyone agreeing with you to make it stop? If not, I think you might need professional assistance.

Maybe we can get Ken Burns to do a 10 part series on PBS for the post-mortem in 20 years. But until such time, your rants make you look foolish, and fail to move the ball forward at United.

For all the past problems with United and their management (and there are many, way before Smisek) you're contributory to the problem now.

airzim wrote:

ual747den wrote:

exunited wrote:

You need to stop. The lack of maturity regarding this subject is absurd. And the continual histrionic and grandiose memories of the former companies is ridiculous. What do you need to make your hurt feelings go away? Does it take everyone agreeing with you to make it stop? If not, I think you might need professional assistance.

Maybe we can get Ken Burns to do a 10 part series on PBS for the post-mortem in 20 years. But until such time, your rants make you look foolish, and fail to move the ball forward at United.

For all the past problems with United and their management (and there are many, way before Smisek) you're contributory to the problem now.

Well allow me to retort,

Our comments are completely relevant because it is a FACT that the co management did not understand the importance of the high value customer to the UA operation. FACT. Today we are discussing the issue of revenue per seat mile shortfalls that exist vs DL and AA that are a direct result of the co management chasing them away by cutting their perks and programs to save a buck. FACT. So, please tell me how these posts are not only pertinent to this thread but also lack accuracy.

To solve a problem, you need to define it accurately as well as determine how you got here so that you can stop doing the wrong thing. Is this not correct in your mind?

stlgph wrote:

tphuang wrote:

I agree that Wall Street is focused more on short term rather than long term. However, the question is whether or not ua current expansion is in the right places. Their efforts of dumping excessive capacity from north east to Florida to fight spirit with basic economy is what brings down the yields. That will not draw the high revenue flyers. Their basic economy effort has only resulted in lost revenue that Scott Kirby himself has admitted to. You can't expand just for the sake of expanding.

Are they? I mean, you could go through the list of investors and find their buys, sells, holds, and trades. The key investors that matter at UAL are strong, institutional investors, and short term isn't their plan.

its of my opinion that most Wall Street investors don't operate on the horizons of several years which is what it will probably take for Kirby vision to really pay off.

UA and SQ do NOT have a JV. They barely work together at all.

ual747den wrote:

caverunner17 wrote:

jumbojet wrote:

Can anyone say; IAH-SYD, LAX-SIN, which by the way, haven't even started up yet. What is UA thinking? Once those flights start up, I would imagine things will only get worse.

This. Those SIN flights I just don't get. Although they may be filling the front, the Y fares in the back are absolute trash. I'm seeing sub $700 fares to SIN from ORD connecting through SFO or LAX in November. UA is getting into the ULH game with a crappy product compared to competitors and trash Y fares.

Let us just assume for argument's sake that you are reasonably correct with these new SIN flights, that the Y fares aren't the best but as you say the front of the plane is selling very VERY well. In addition to that information keep in mind that UA and SQ have a JV that covers these flights. Now just based on that information alone it seems that you believe that there is not an opportunity to make money on the route/s? Why do you feel this way? Do you not think that a route can be successful without strong Y sales?

*** Just FYI in the above post I am not saying that the person I quoted is either correct or incorrect with the facts that he used to base his opinion on. I did not, am not, and would not use any actual information that I may be privy to because of my position. I just want to be clear that I am talking in generalities rather than discussing this actual route using REAL data from the airline.

tphuang wrote:

stlgph wrote:

tphuang wrote:

I agree that Wall Street is focused more on short term rather than long term. However, the question is whether or not ua current expansion is in the right places. Their efforts of dumping excessive capacity from north east to Florida to fight spirit with basic economy is what brings down the yields. That will not draw the high revenue flyers. Their basic economy effort has only resulted in lost revenue that Scott Kirby himself has admitted to. You can't expand just for the sake of expanding.

Are they? I mean, you could go through the list of investors and find their buys, sells, holds, and trades. The key investors that matter at UAL are strong, institutional investors, and short term isn't their plan.

its of my opinion that most Wall Street investors don't operate on the horizons of several years which is what it will probably take for Kirby vision to really pay off.

correct!

And the reason is that the funds, insurance companies etc also need to show increases in the value of their portfolios today to their investors, bosses, etc even if they don't plan to sell for a long time. Nobody wants to explain why their investment are going down to their investors. Just telling investors not to worry it will go up later does not sit when their statements go down in value.

jasoncrh wrote:

UA and SQ do NOT have a JV. They barely work together at all.

Correct. They have an interline agreement in place, but there is no JV. In fact, I believe they still do not codeshare.

LAXintl wrote:

My high-level call summary -

o Oscar honest and admitted United has a self-inflicted wound and needs to dig out somehow
o Kirby vision is this requires growth and earning more market share. Analysts not very receptive.
o Analyst wondering where the Oscar's previously promised billion in revenue enhancement are and where promised cost management is.
o UA not producing results as is with outlook negative so trying to grow will only make things worse.
o Basically, market skeptical of management vision
o Oscar's honeymoon and benefit of doubt is over

Ouch! Doesn't sound like analysts are at all happy.

So, I posted earlier that I think UA is getting hurt by dumping excessive capacity in the TPAC market, namely from new routes such as IAH-SYD, LAX-SIN, and even SFO-SIN (All TPAC). I've read plenty of articles over the months that talk about oversatuation in the TPAC market yet UA seems to keep adding more and more seats over the Pacific.. Anaylists continue to say that and as recently as today. so when i make a comment about that, its not baseless. Some think I am senslessly attacking UA employees. That is not the case. There is an article from The Street which talks about United's TPAC struggles which undoudtedly hurts their earnings.

"Bottom line is there is a path to sequential improvement but there is more downside risk in upside potential," DeNardi wrote, noting that industry capacity expansion in the Pacific hurts United, which generates 12% of passenger revenue from the region compared with 7% for Delta.

.

Full story here:

https://www.thestreet.com/story/1434345 ... ether.html

LAXintl wrote:

My high-level call summary -

o Oscar honest and admitted United has a self-inflicted wound and needs to dig out somehow
o Kirby vision is this requires growth and earning more market share. Analysts not very receptive.
o Analyst wondering where the Oscar's previously promised billion in revenue enhancement are and where promised cost management is.
o UA not producing results as is with outlook negative so trying to grow will only make things worse.
o Basically, market skeptical of management vision
o Oscar's honeymoon and benefit of doubt is over

https://www.cnbc.com/2017/10/19/united- ... -hole.html

Not exactly a comment you'd want to say on an earnings call, but my question is what exactly can UA do to combat the LCCs?

The basic economy product they were trying to roll out was garbage to say the least.

tphuang wrote:

stlgph wrote:

tphuang wrote:

I agree that Wall Street is focused more on short term rather than long term. However, the question is whether or not ua current expansion is in the right places. Their efforts of dumping excessive capacity from north east to Florida to fight spirit with basic economy is what brings down the yields. That will not draw the high revenue flyers. Their basic economy effort has only resulted in lost revenue that Scott Kirby himself has admitted to. You can't expand just for the sake of expanding.

Are they? I mean, you could go through the list of investors and find their buys, sells, holds, and trades. The key investors that matter at UAL are strong, institutional investors, and short term isn't their plan.

its of my opinion that most Wall Street investors don't operate on the horizons of several years which is what it will probably take for Kirby vision to really pay off.

Then you should learn about the stock market.

exunited wrote:

tphuang wrote:

stlgph wrote:

Are they? I mean, you could go through the list of investors and find their buys, sells, holds, and trades. The key investors that matter at UAL are strong, institutional investors, and short term isn't their plan.

its of my opinion that most Wall Street investors don't operate on the horizons of several years which is what it will probably take for Kirby vision to really pay off.

correct!

And the reason is that the funds, insurance companies etc also need to show increases in the value of their portfolios today to their investors, bosses, etc even if they don't plan to sell for a long time. Nobody wants to explain why their investment are going down to their investors. Just telling investors not to worry it will go up later does not sit when their statements go down in value.

That's a lovely idea and all, but the expectation was $2.16 of earnings a share. The earnings per share came in at $2.22, beating those expectations.

I mean, hell, if we're going to base the entire future of this company off of one, still profitable quarter, which beat expectations, off of today, then UAL might as well turn off the lights and fire everyone.

Apple, too.

It's over for both of them.

R.I.P.

One company having an off day of period doesn't kill a fund. Learn how institutional investing works. Short term isn't the plan.

jetblastdubai wrote:

Although it might not be substantial but has anyone publicly put a dollar amount on what staffing two separate FA groups costs the combined company and how much that has affected the bottom line over the past 7 years? I know UA has stated that they swapped some widebody planes around between EWR and IAD that wasn't operationally optimal but did it to satisfy the "my plane, your plane" AFA issue.

I've always wanted this quantified as well. The "my plane, your plane" issue will not be resolved until October 2018. By that date, it will have taken 8 years to fully integrate the two groups...in the meantime, operational inefficiencies will continue to persist.

Could IAH for UAL face something like STL and TWA?

wxtech wrote:

Could IAH for UAL face something like STL and TWA?

Not sure what you entirely mean by this, but it's expected for IAH to slow down for a few months. Lots of attention still needed in that region and headed off vacation isn't at the top of the priority list for a number of people.

LAXintl wrote:

My high-level call summary -

o Oscar honest and admitted United has a self-inflicted wound and needs to dig out somehow
o Kirby vision is this requires growth and earning more market share. Analysts not very receptive.
o Analyst wondering where the Oscar's previously promised billion in revenue enhancement are and where promised cost management is.
o UA not producing results as is with outlook negative so trying to grow will only make things worse.
o Basically, market skeptical of management vision
o Oscar's honeymoon and benefit of doubt is over

There you go. Oscar is honest and sincere. He admits when the company makes a mistake and he acknowledges when a challenge exists. But as a 1K who has many 1K's leave (and many of them are still bitter about UA) I am impressed by his integrity. It reminds me of banking when you're audited and 8 out of 10 banks will say there's no dirt anywhere. The other 2 bank get the crap audited out of them. Who's the better place in the long run? And as a UA investor, of course I'm not happy about the market taking a single statement by this honest Abe type of guy, especially since it was a good rebound over the last couple weeks and now that's been voided in a day.

But acknowledging things for what they are, if the market wants to read something out of his statement that it isn't, then go ahead. I'll buy more shares. His integrity is acknowledged among fellow remaining elites, and my interactions with UA have become a lot better too, so I think they are also more confident on the balance than they were a year or two after the merger. He's not pessimistic about UA, he is confident about UA's ability to solve these issues. The new premium cabins are great, as are the new Polaris clubs. It's still a mess at places like EWR as they remodel, it's still a mess with the reconfigured 763s as they sometimes have issues with the new cabins, but these issues are temporary. Directionally they are going the right way.

Basic economy was a step too far, they need to figure out how to price that better. Same with premium, if my product is a flat bed instead of a barcalounger than perhaps CPUs aren't the way to go, as the absence of CPUs on premium transcontinental service shows. They already made that adjustment for BOS-SFO, time to make service improvements for the other domestic falt bed flying and in return step up the service. Proper pricing seems key given that most flights are really full. And when they are consistently at 60% (I personally love the walk down memory lane to the 1990s / 2000s) then they should right size the aircraft.

wxtech wrote:

Could IAH for UAL face something like STL and TWA?

No, UA does a ton of LatAm flying out of IAH, that's not going away to LAX or somehow rebuilding a hub in MIA. Mind you that intra-Texas / adjacent states is huge for UA at IAH as well, much like for AA at DFW. Not going anywhere.

exunited wrote:

airzim wrote:

ual747den wrote:

exunited wrote:

You need to stop. The lack of maturity regarding this subject is absurd. And the continual histrionic and grandiose memories of the former companies is ridiculous. What do you need to make your hurt feelings go away? Does it take everyone agreeing with you to make it stop? If not, I think you might need professional assistance.

Maybe we can get Ken Burns to do a 10 part series on PBS for the post-mortem in 20 years. But until such time, your rants make you look foolish, and fail to move the ball forward at United.

For all the past problems with United and their management (and there are many, way before Smisek) you're contributory to the problem now.

Well allow me to retort,

Our comments are completely relevant because it is a FACT that the co management did not understand the importance of the high value customer to the UA operation. FACT. Today we are discussing the issue of revenue per seat mile shortfalls that exist vs DL and AA that are a direct result of the co management chasing them away by cutting their perks and programs to save a buck. FACT. So, please tell me how these posts are not only pertinent to this thread but also lack accuracy.

To solve a problem, you need to define it accurately as well as determine how you got here so that you can stop doing the wrong thing. Is this not correct in your mind?

The FACT is it’s over!!! Can we please please please move on and build this thing into what it’s supposed to and can be? We are trying to move forward. Maybe because you’re in the FA group you still see lines drawn, but the rest of us have moved on and are working together so please stop dragging us into the dumb UA vs CO nonsense.

Perhaps Kirby could do some Hat Tricks to get UA back on track

B737900ER wrote:

The FACT is it’s over!!! Can we please please please move on and build this thing into what it’s supposed to and can be? We are trying to move forward. Maybe because you’re in the FA group you still see lines drawn, but the rest of us have moved on and are working together so please stop dragging us into the dumb UA vs CO nonsense.

Thank you!

It's amazes me how much each hard core legacy still blames the other legacy for the shortcomings. For just one example, exunited blames CO for much, yet doesn't seem to remember what Glen Tilton did to UA (cancelled pensions, etc.). That is, each carrier had it's strengths and weaknesses and pointing to the past will not solve the current problems.

The truth of the matter is, UA has a strong international network and a very weak domestic network. AA & DL have very strong domestic networks. When international flying falls, like it is at the moment, DL & AA can still recover while UA faces huge losses. Unless they up their domestic market share it's not going to be pretty for them.

Super80Fan wrote:

The truth of the matter is, UA has a strong international network and a very weak domestic network. AA & DL have very strong domestic networks. When international flying falls, like it is at the moment, DL & AA can still recover while UA faces huge losses. Unless they up their domestic market share it's not going to be pretty for them.

right....which is why UA is growing domestically (and overall) at a faster clip than DL or AA is. Ultimately that is what wall street hates as it drives down what UAs earnings would have been if they had a larger domestic network and were growing at industry pace vs their peers. There are some in wall street who look at a longer term prospect however there are lots who just want a quick buck. Fundamentally I think UA growing at todays rate will pay off in the long run by giving UA employees and long term shareholders what they want...a rock solid place to work at and invest in but its going to come at a cost and that is short term earnings. That being said YTD they have earned $1.55 billion which certainly is not a bad result and shows that even if they are currently under performing their peers they are a rather profitable enterprise.

Systemwide Growth:
UA 3.3%
DL 0.6%
AA 0.8%

Domestic Growth:
UA 4.5%
DL 2.3%
AA -1.3%

United1 wrote:

Super80Fan wrote:

The truth of the matter is, UA has a strong international network and a very weak domestic network. AA & DL have very strong domestic networks. When international flying falls, like it is at the moment, DL & AA can still recover while UA faces huge losses. Unless they up their domestic market share it's not going to be pretty for them.

right....which is why UA is growing domestically (and overall) at a faster clip than DL or AA is. Ultimately that is what wall street hates as it drives down what UAs earnings would have been if they had a larger domestic network and were growing at industry pace vs their peers. There are some in wall street who look at a longer term prospect however there are lots who just want a quick buck. Fundamentally I think UA growing at todays rate will pay off in the long run by giving UA employees and long term shareholders what they want...a rock solid place to work at and invest in but its going to come at a cost and that is short term earnings. That being said YTD they have earned $1.55 billion which certainly is not a bad result and shows that even if they are currently under performing their peers they are a rather profitable enterprise.

Systemwide Growth:
UA 3.3%
DL 0.6%
AA 0.8%

Domestic Growth:
UA 4.5%
DL 2.3%
AA -1.3%

UA has a LONG way to go domestically but I am happy they are growing it. Only a few years ago unless you lived in Chicago, Newark, San Francisco, Houston, or Washington DC, UA was not really a strong competitor or even an option in some markets. I'm glad to see progress is being made but they need to continue it.

FlyHossD wrote:

exunited wrote:

Winning back the high end customers that fled during the disastrous smisek / "do everything the co way" era will cost huge amounts of money and take a long time. Planes are full but not with the proper mix anymore. Kirby has said this before and that the BOD is keenly aware this is a long term project and has given him and Oscar the green light to fix. Chasing earning for next quarter mentality to maximize the CEO's bonus at the expense of the long term health is no longer in play. Kirby will either be proven right, or shown the door and in the meantime, the usual UA haters will have a field day as UA rebuilds.

For the most part, that's a very good post. But you're missing one key point - Smisek's way was not the "the co way" - it was the Smisek way. While he came from CO, you should remember that he was CEO there for only about 18 weeks before pulling the trigger on the merger with UAL. He was despised by many at CO and all those years at CO under Bethune and Brenneman seem to have been wasted on him.

The Smisek way was far too focused on costs at the exclusion of revenue, such as his decision to pull out of JFK. UAL will pay the price for that myopic vision for years to come.

You make such a valid point that is lost in an a-net dominated by bitter retirees and budding 13 y/o. NOTHING about the merger or Smisek was the "CO way".

CO saw UA as a contagion and publicly said as much under Larry-

http://www.reuters.com/article/us-conti ... 4420080428

“We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today’s environment,” Chief Executive Larry Kellner

Tragically forces much bigger than CO wanted consolidation and barely a year later Larry was out. The Hedge Funds would find a man to do the deed if he refused.

https://www.cbsnews.com/news/continenta ... alks-away/


Even before the merger start just weeks into Smisek reign it was clear he was NOT going continue the CO legacy. Not even 90 days in the cost cutting started with the start of Buy on Board. This was only the first step in the total destruction of Continental service levels.


There is a lovely fable adored by many a Tulip. The United delivered SQ level of service while Hill-Billy CO flew trailer trash around Texas. It is true that UA offer very rich programs such as Global Services. It is undeniable that this lavish and generous program helped UA retain many if not most of it best customers from defecting. Modern CO did not have such, but rather leaned on it's reputation for clean planes, a solid operation and consistent customer service.

This was not always the case. In the past Onepass had been much richer. Offering Lifetime top tier elites status and other incentives to high yield pax, but this was also in the days when CO sported 4 different paint job had a aging Noah's Ark fleet and was known for awful service and a broken operation (sound familiar?) Once you run a good airline you do not need to buy "loyalty" with endless compensation and upgrading you J pax into F as a SOP.


The truth is the merger was a disaster. The reason why is best summed up by the Huffington Post-

"It definitely seems, instead of raising United to the level where Continental used to be, Mr. Smisek is content in lowering the expectations of Continental’s employees and customers to that of United’s employees and customers."

https://www.huffingtonpost.com/david-fa ... 79046.html


I am glad that corner has been turned and look forward to what ever is next. While much of what was CO was lost in the merger you still see some of it in the future. Such as the use of smaller 2 cabin long haul planes to build out an under developed hub. Look what the 787 has done for SFO! The expansion to various secondary Chinese cities along with the addition of ULH to SIN echo the same that took place in EWR which added everything from EDI to BOM under CO.

That bring up a good point. The value UA did bring, a under utilized network. The crown jewel of SFO and collection of LHR slots that had been only partially used (CO in fact had leased some of them from UA) and revenue generating products like Y+. I hope going forward we see more growth in midsize domestic market and soon the intro of a true W cabin. This will see the New UA take a new path that is not old UA or CO.

tpaewr wrote:

I am glad that corner has been turned and look forward to what ever is next.

That's the catch.
As a loyal CO&UA elite/premier flyer for nearly two decades, I thrived with Gordon's CO, and accepted Kellner's CO. I put up with the pre merger Smisek CO, the mid-merger carrier, and the post merger UA.
And this summer, I got tired of waiting.
So I defected to an airline that admittedly promises less, but delivers on those promises consistently and without making me feel like the company's greatest adversary is their customer. They actually approved my status match request, just today. And I'm thrilled.
I've had enough of flight attendants screaming at gate agents over the aircraft PA system. Of tossing my food onto my tray without even pausing their anti-company rant to their coworker. Of pilots at SFO taxying out so painfully slowly that, BOOM, they've suddenly timed out, and I'm now stuck in SFO overnight. Of 16 hour maintenance delays. Of a basic economy product so draconian that no one in their right mind wouldn't buy up, and then be left with the accurate feeling of being a sucker.
And this month, United is making further cuts to their domestic first class catering, because, of all things, they're over budget and blaming it on the "stellar" new Polaris catering?!?
Give me a break.
I feel like UA has some great people. And I think Oscar is a great guy. And a good leader, particularly when properly informed (Dao, cough cough, Dao).
But life is short.
Too short for me to continue funneling my own personal cash into United's inept pockets.

United1 wrote:

Super80Fan wrote:

The truth of the matter is, UA has a strong international network and a very weak domestic network. AA & DL have very strong domestic networks. When international flying falls, like it is at the moment, DL & AA can still recover while UA faces huge losses. Unless they up their domestic market share it's not going to be pretty for them.

right....which is why UA is growing domestically (and overall) at a faster clip than DL or AA is. Ultimately that is what wall street hates as it drives down what UAs earnings would have been if they had a larger domestic network and were growing at industry pace vs their peers. There are some in wall street who look at a longer term prospect however there are lots who just want a quick buck. Fundamentally I think UA growing at todays rate will pay off in the long run by giving UA employees and long term shareholders what they want...a rock solid place to work at and invest in but its going to come at a cost and that is short term earnings. That being said YTD they have earned $1.55 billion which certainly is not a bad result and shows that even if they are currently under performing their peers they are a rather profitable enterprise.

Systemwide Growth:
UA 3.3%
DL 0.6%
AA 0.8%

Domestic Growth:
UA 4.5%
DL 2.3%
AA -1.3%

growth just for the sake of growth is not going to be helpful.

For example, their recent effort to add flights to SFO to fight back against AS adds there are needed since they need to defend their hub.

However, a lot of their basic economy efforts and adding capacity on the ORD/EWR-PBI/FLL is just extremely low yielding. Outside of depressing Spirit RASM (which it has done), what else does that really accomplish other than loosing the middle yielding customers to WN and B6? It was just July that Kirby admitted BE went too far and lost UA a lot of money.

Yet in LAX where they said they want to grow, all I've seen is cuts.

I don't see how that builds new hubs/focus cities or attract higher yielding customers.

Super80Fan wrote:

The truth of the matter is, UA has a strong international network and a very weak domestic network. AA & DL have very strong domestic networks. When international flying falls, like it is at the moment, DL & AA can still recover while UA faces huge losses. Unless they up their domestic market share it's not going to be pretty for them.

They need to grow both their domestic narrowbody fleet and their large 76 seat regional jets. Adding used A319s and now A320s is a start, but it's a trickle and does not help with their regional jet growth. I think UA need around 100 additional mainline narrowbodies for domestic service, I think they believe this also because that's where they were heading just a year or so ago with their order for 65 new 73Gs and the 25 or so used A319s.

They need a 100 seater, 88 of them to be precise. This would reach that 100 additional domestic narrowbody goal, combined with the used A319s/A320s, plus it would allow them to pass their current caps of 153 76 seat regional jets and add an additional 70 ERJ-175s.

Either order the Cseries, the E2 or acquire some used ERJ-190s. Pick one and "go forward".

tphuang wrote:

United1 wrote:

Super80Fan wrote:

growth just for the sake of growth is not going to be helpful.

For example, their recent effort to add flights to SFO to fight back against AS adds there are needed since they need to defend their hub.

However, a lot of their basic economy efforts and adding capacity on the ORD/EWR-PBI/FLL is just extremely low yielding. Outside of depressing Spirit RASM (which it has done), what else does that really accomplish other than loosing the middle yielding customers to WN and B6? It was just July that Kirby admitted BE went too far and lost UA a lot of money.

Yet in LAX where they said they want to grow, all I've seen is cuts.

I don't see how that builds new hubs/focus cities or attract higher yielding customers.

I'm not seeing growth just for the sake of growth... I'm seeing lots of growth from hubs to spoke cities that up until now were only on RJs and I'm seeing UA add flights in markets where they were spilling customers to other airlines. Yes they are adding in SFO rather heavily but that is both a competitive response to AS and to take advantage of the bay areas economy.

Basic Economy was rolled out too quickly and was scaled back once that was apparent but that is simply a product designed to compete against ULCCs it's not something that UA is using to drive growth.

LAX is fairly stable at this point but you won't see many more flights being added at LAX until UA is able to get additional gates...they are maxed out.

Where do you think UA should add fucus cities/hubs in? SF? Chicago? NYC? LA? DC? One of UAs strength, and challenges, is their hubs are in some of largest and highest yielding markets already...they have no need to add more hubs to the network UA just needs to build out what they already have.

United1 wrote:

tphuang wrote:

United1 wrote:

growth just for the sake of growth is not going to be helpful.

For example, their recent effort to add flights to SFO to fight back against AS adds there are needed since they need to defend their hub.

However, a lot of their basic economy efforts and adding capacity on the ORD/EWR-PBI/FLL is just extremely low yielding. Outside of depressing Spirit RASM (which it has done), what else does that really accomplish other than loosing the middle yielding customers to WN and B6? It was just July that Kirby admitted BE went too far and lost UA a lot of money.

Yet in LAX where they said they want to grow, all I've seen is cuts.

I don't see how that builds new hubs/focus cities or attract higher yielding customers.

I'm not seeing growth just for the sake of growth... I'm seeing lots of growth from hubs to spoke cities that up until now were only on RJs and I'm seeing UA add flights in markets where they were spilling customers to other airlines. Yes they are adding in SFO rather heavily but that is both a competitive response to AS and to take advantage of the bay areas economy.

Basic Economy was rolled out too quickly and was scaled back once that was apparent but that is simply a product designed to compete against ULCCs it's not something that UA is using to drive growth.

LAX is fairly stable at this point but you won't see many more flights being added at LAX until UA is able to get additional gates...they are maxed out.

Where do you think UA should add fucus cities/hubs in? SF? Chicago? NYC? LA? DC? One of UAs strength, and challenges, is their hubs are in some of largest and highest yielding markets already...they have no need to add more hubs to the network UA just needs to build out what they already have.

Where ua chooses to build up is not my concern. I am saying that in some cases like sfo where it's defending its hub, those are important adds that need to be done. In other places like la, all the recent oag report show them cutting.

A lot of the other adds they have done is purely for the purpose of trying to chase spirit out of their hubs. All that does is pick up lowest yielding customers. For example, They are up to 10 daily flights in April from ewr to fll. All that does is bring down yield by a lot. Long term, that doesn't help their position.

United1 wrote:

I'm not seeing growth just for the sake of growth... I'm seeing lots of growth from hubs to spoke cities that up until now were only on RJs and I'm seeing UA add flights in markets where they were spilling customers to other airlines. Yes they are adding in SFO rather heavily but that is both a competitive response to AS and to take advantage of the bay areas economy.

Basic Economy was rolled out too quickly and was scaled back once that was apparent but that is simply a product designed to compete against ULCCs it's not something that UA is using to drive growth.

LAX is fairly stable at this point but you won't see many more flights being added at LAX until UA is able to get additional gates...they are maxed out.

Where do you think UA should add fucus cities/hubs in? SF? Chicago? NYC? LA? DC? One of UAs strength, and challenges, is their hubs are in some of largest and highest yielding markets already...they have no need to add more hubs to the network UA just needs to build out what they already have.

I suspect the most critical spillage began when they lost US Airways as a partner.

They are not going to regain those customers. Indeed, I suspect they lost even more when AA connected the US network from DCA, PHL, and CLT to its own at ORD and elsewhere.

UA may be at a point now where whatever they add will only serve to lower its margins. (With two more gate, next up is LAX.)

tphuang wrote:

United1 wrote:

tphuang wrote:

.

Where ua chooses to build up is not my concern. .

You say this but then you contradict yourself by arguing there are markets they should not be building up and others they should. UA is not trying to drive NK out...

As for OAG remember that only shows a small snapshot of time and only the number of flights, not the type of aircraft that is being flown. SFO-ONT for instance just went from 9 flights down to 6 a cut of 3 flights but an increase in capacity as the route went from all RJs to a mix of RJs and mainline.

United1 wrote:

tphuang wrote:

United1 wrote:

.

Where ua chooses to build up is not my concern. .

You say this but then you contradict yourself by arguing there are markets they should not be building up and others they should. UA is not trying to drive NK out...

As for OAG remember that only shows a small snapshot of time and only the number of flights, not the type of aircraft that is being flown. SFO-ONT for instance just went from 9 flights down to 6 a cut of 3 flights but an increase in capacity as the route went from all RJs to a mix of RJs and mainline.

I am just saying that if the goal of increase is to improve or consolidate your position in hub city and keeping all the high yielding flyers, then it makes sense. Short term losses to beat back challengers are what an airline needs to do. And that's what is happening in sfo. At some of the other hubs, the moves are clearly targeted at getting the lowest yielding customers and chasing out nk. That doesn't help an airline gain higher yielding customers. In fact, one could argue that turns off corporate customers who end up getting booked on basic economy due to corporate policy.

My take on the call is that UA did not come off as prepared. Yes Oscar Munoz was honest, but he and Kirby sounded like they had just been woken up and put on speakerphone.

https://www.bloomberg.com/news/articles ... all-street

The easy takeaway was less that they were looking long term and more that they really weren't sure. And thats a bad thing.

Well, it was definitely an unconventional earnings call. My view is that Oscar / Kirby were faced with a "when do we tell the street that the baby is ugly" decision. They decided this quarter was the time to do it. It's interesting timing; they've been in their jobs long enough now where they have known this for awhile. I suspect that they thought some of their moves would have shown more improvement by now and that updated results & analysis shifted that thinking. Ultimately, the ugly baby is going to take longer to grow into an attractive swan.

Long run, I think UA will be fine and will improve. It's going to be a long hard slog to get there. There will also be macroeconomic factors that will help UA at some point; what are weaknesses for them now (exposure to TPAC) will change at some point.

They have to get better at execution in the meantime; the roll out of BE, the pre-mature announcement of Polaris etc... those things don't help. Getting execution of these initiatives on track and focusing on execution excellence will naturally win back some of the customers they're looking to re-gain.

Things are not going well for United this year. YTD, it is down 18%. It is facing all kind of issues right from struggling to keep costs down, maintain market share, and the much publicized customer service scandal that hit hard in April. United is taking steps to fix these issues. Let's hope for the best. Here is the 3Q highlights: http://alph.st/b3d0d459

FlyHossD wrote:

exunited wrote:

Winning back the high end customers that fled during the disastrous smisek / "do everything the co way" era will cost huge amounts of money and take a long time. Planes are full but not with the proper mix anymore. Kirby has said this before and that the BOD is keenly aware this is a long term project and has given him and Oscar the green light to fix. Chasing earning for next quarter mentality to maximize the CEO's bonus at the expense of the long term health is no longer in play. Kirby will either be proven right, or shown the door and in the meantime, the usual UA haters will have a field day as UA rebuilds.

For the most part, that's a very good post. But you're missing one key point - Smisek's way was not the "the co way" - it was the Smisek way. While he came from CO, you should remember that he was CEO there for only about 18 weeks before pulling the trigger on the merger with UAL. He was despised by many at CO and all those years at CO under Bethune and Brenneman seem to have been wasted on him.

The Smisek way was far too focused on costs at the exclusion of revenue, such as his decision to pull out of JFK. UAL will pay the price for that myopic vision for years to come.

Spot on. $misek was focused on the stock price and whatever metrics made the analysts (and his broker) happy. Sure, a CEO does have a fiduciary responsibility to the shareholders, but his "management by spreadsheet" tactics had a huge impact and will have lingering effects for years.

And for the love of all thing holy, can we stop with the pmCO this, pmUA that? The merger is done and 5+ years have past. Finger pointing solves nothing, and if it did, there is enough to cover both sides. We are left with an airline that is wallowing in a morass of bitter, where common sense has become a secondary priority. Ground staff are getting felony assault charges, and in flight crew think it is okay to keep a passenger sitting in a urine soaked seat after another passenger gave him a golden shower after take off. If these events don't give us a clue how bad it's become, I don't know what does!

commavia wrote:

The question remains how much patience Wall St will have for this "investment." ... At this point, there is practically nothing legally or financially stopping United from growing. The only inhibitor on growth, if any, will be the willingness and ability of United's management to stay the course in the face of analyst and investor skepticism. I think United's leadership is doing a good job of explaining the thinking and the strategy, and the financial community appears to be giving Munoz and Kirby leeway to do what they're doing. Will this patience last?

Spirit tried to do essentially the same thing, telling analysts that per share profit would rise based on total growth, even though profit per passenger (i.e. margin) would decline. Wall Street didn't buy it and CEO Baldanza was out of a job in a year - even though he was right.

exunited wrote:

Well allow me to retort,

Our comments are completely relevant because it is a FACT that the co management did not understand the importance of the high value customer to the UA operation.

Allow me to retort. High value customers were treated very well by CO prior to the merger with United and they had a number of lucrative corporate contracts that were maintained for many years on end. They also maintained a high quality of service throughout every cabin of the aircraft and level of elite customer. There was a resemblance of common business sense to their programs in comparison to the Global Services program at United, where the inmates ran the asylum and the airline gave them virtually anything they demanded. Why? It kept their revenue when operations were not going well. Benefits of kings and certificates given out like candy. Great for customer retention, but terrible for the bottom line, and that is all $misek cared about. That is not a CO thing. That is a personal greed thing - his compensation was pinned to stock performance.

United1 wrote:

Basic Economy was rolled out too quickly and was scaled back once that was apparent but that is simply a product designed to compete against ULCCs it's not something that UA is using to drive growth.

Except, BE fares don't usually compete with ULCC's on pricing. When your BE fare is still $100 more than Spirit or Frontier on a given route, why would I ever fly UA? It's even worse with WN has better fares on a route than UA's BE fare.

It's not hard to do the math. A checked bag costs around $60 on ULCC's. If my ULCC fare is >$80 cheaper than a legacy normal economy fare (I'll give a legacy a little value worth spending on), then I'll fly the ULCC. If it's not, then I'll fly legacy. It's a 2-3 hour flight. I'm not spending $100 more to fly UA on a 2-3 hour flight.

DL's BE is perfectly fine. I don't care about elite benefits or seat assignments or whatever. I just want to go from A-B. Free bag makes me choose you over the competition.

mbm3 wrote:

exunited wrote:

Well allow me to retort,

Our comments are completely relevant because it is a FACT that the co management did not understand the importance of the high value customer to the UA operation.

Allow me to retort. High value customers were treated very well by CO prior to the merger with United and they had a number of lucrative corporate contracts that were maintained for many years on end. They also maintained a high quality of service throughout every cabin of the aircraft and level of elite customer. There was a resemblance of common business sense to their programs in comparison to the Global Services program at United, where the inmates ran the asylum and the airline gave them virtually anything they demanded. Why? It kept their revenue when operations were not going well. Benefits of kings and certificates given out like candy. Great for customer retention, but terrible for the bottom line, and that is all $misek cared about. That is not a CO thing. That is a personal greed thing - his compensation was pinned to stock performance.

Patently false, United historically maintained a seat mile revenue premium to the competition because of their catering to the high yield customer, co did not even come close in any way. Since co preferred flying around Jed Clampett and family, that's what smisek tried to replicate for UA with the results we see today. Horrible policy and completely out of his league running a true global airline.

exunited wrote:

mbm3 wrote:

exunited wrote:

Well allow me to retort,

Our comments are completely relevant because it is a FACT that the co management did not understand the importance of the high value customer to the UA operation.

Allow me to retort. High value customers were treated very well by CO prior to the merger with United and they had a number of lucrative corporate contracts that were maintained for many years on end. They also maintained a high quality of service throughout every cabin of the aircraft and level of elite customer. There was a resemblance of common business sense to their programs in comparison to the Global Services program at United, where the inmates ran the asylum and the airline gave them virtually anything they demanded. Why? It kept their revenue when operations were not going well. Benefits of kings and certificates given out like candy. Great for customer retention, but terrible for the bottom line, and that is all $misek cared about. That is not a CO thing. That is a personal greed thing - his compensation was pinned to stock performance.

Patently false, United historically maintained a seat mile revenue premium to the competition because of their catering to the high yield customer, co did not even come close in any way. Since co preferred flying around Jed Clampett and family, that's what smisek tried to replicate for UA with the results we see today. Horrible policy and completely out of his league running a true global airline.

Not near history. UAs revenue premium over its peers was significantly eroded during the bankruptcy years to the point where they trailed DL and CO. But once again that’s neither here nor there. All that matters is moving ahead. Get over your smisek obsession. He’s gone, thank goodness. Now can we all just please get along?

Long term revenue growth over short term stock gains is the way to build a business. It does take time and the analysts will whine because that's what they do. The question is whether the plan executed based on Kirby's vision pans out? Unless you are thinking short-term, you have to see where this is going.

I don't believe Kirby would allow LAX-SIN to start without good indicators on the revenue side. If they are getting a premium up front, they can well afford to be softer on the revenue side in the back. The 789 is hugely efficient and folks are willing to pay a premium for the direct flight up front so it should do well.

Please keep the thread on topic. This isn't about UA vs. CO. I think we can all agree that argument is getting pretty old, but that aside, it has nothing to do with this discussion.

✈️ atcsundevil

Want to turbocharge a network transformation that otherwise is going to take half a decade to complete? Redeploy hundreds of daily flights you already have to better, stronger hubs. As much as I have hoped for success and growth, I think the writing is on the wall for the IAD hub. They missed the boat with dehubbing CLE, opting to just shed the capacity outright instead of repositioning the assets, like DL did so brilliantly with CVG/MEM --> SEA/NYC. At Dulles, keep the high-performing international capital routes, beyond-the-perimeter flights, and hub-to-hub missions. Everything else should be moved elsewhere to support this "organic" network growth.

United suffers from undersized, inefficient hubs--particularly at the top end. The muscle of AA-DFW and DL-ATL eclipse UA at ORD by approximately 50 and 100%, respectively. They also operate in far more geographically favorable locations and have far less competitive exposure than ORD. Additionally, CLT, DTW, MSP operate in similar vanguards at reduced, albeit impressive, scales. United has hubs in all the right places for attracting passengers, but has them in all the wrong places for attracting competition. For one, I think IAH is inappropriately undersized. The local oil-based economy is lukewarm currently, but otherwise it has the terminal facilities, airfield, weather, geography, and relative lack of competition to support a much larger operation than sub-500 flights per day. They need not even look more than a couple hundred miles north to see how it's properly done.

SonomaFlyer wrote:

Long term revenue growth over short term stock gains is the way to build a business. It does take time and the analysts will whine because that's what they do. The question is whether the plan executed based on Kirby's vision pans out? Unless you are thinking short-term, you have to see where this is going.

I don't believe Kirby would allow LAX-SIN to start without good indicators on the revenue side. If they are getting a premium up front, they can well afford to be softer on the revenue side in the back. The 789 is hugely efficient and folks are willing to pay a premium for the direct flight up front so it should do well.

Agreed. And it is a great competitive advantage vs the US3 and all the other airlines going have high value SIN to LAX (US) customers. UA nonstop has great connectivity to the largest business markets from the US. They can keep using these efficient planes to connect the dots, knock out connections with higher value O/D.