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United Loses $579 Million In 1Q09  
User currently offlineRampRat74 From United States of America, joined Dec 2003, 1525 posts, RR: 2
Posted (5 years 3 months 1 week 5 days 19 hours ago) and read 6056 times:

United Reduces Costs, Improves Reliability, Builds Cash in Difficult Economy
- $579 Million 1Q09 Net Loss ex. Non-Cash Hedge and Other Charges; $382 Million GAAP Loss
- Consolidated 1Q09 PRASM Down 11.1% vs. 1Q08; at Top End of Guidance
- Mainline Non-Fuel CASM ex. Charges Down 1.1%; Total Mainline CASM Down 13.1%
- Improved Full Year 2009 Outlook for Non-Fuel Costs
- Raised Nearly $500 Million in Liquidity; Closed Quarter with Solid $2.5 Billion Unrestricted Cash
- Achieved #1 Rank In On-time Performance Among U.S. Network Carriers






http://www.united.com/press/detail/0,6862,60508,00.html

39 replies: All unread, showing first 25:
 
User currently offlineLAXdude1023 From India, joined Sep 2006, 7512 posts, RR: 24
Reply 1, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5977 times:

Suddenly AA's $375 mil loss doesnt seem so bad.


Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineAdam42185 From United States of America, joined Dec 2005, 413 posts, RR: 0
Reply 2, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5956 times:

How bad is this loss in the greater scheme of things? Can United bounce back from this or are they on their way out?

User currently offlineTu154 From United States of America, joined Dec 2004, 375 posts, RR: 4
Reply 3, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5953 times:

The article I read in WSJ stated UAL lost 382 million in quarter one vs. 549 million in quarter one of last year.


FIRST ON THE ATLANTIC.....FIRST ON THE PACIFIC.....FIRST IN LATIN AMERICA...FIRST 'ROUND THE WORLD.....PAN AM!!
User currently offlineDescendVia From , joined Dec 1969, posts, RR:
Reply 4, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5911 times:



Quoting Adam42185 (Reply 2):

Would you all stop it with that junk..... As bad as they are, UA is still stronger then other major carriers right now.

The real test will be this fall into winter when management try to break the unions.


User currently offlineTexan From New Zealand, joined Dec 2003, 4274 posts, RR: 52
Reply 5, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5881 times:



Quoting Tu154 (Reply 3):
The article I read in WSJ stated UAL lost 382 million in quarter one vs. 549 million in quarter one of last year.

$382 million under GAAP (Generally Accepted Accounting Principles), but $579 million overall.

Quoting Adam42185 (Reply 2):
How bad is this loss in the greater scheme of things? Can United bounce back from this or are they on their way out?

They also rasied $500 million in liquidity, keeping their overall unrestricted cash/equiv. balance static. 24/7 Wall Street, however, ranks United as one of the brands most likely to disappear in the next year or two: http://www.bizjournals.com/dallas/st...09/04/20/daily7.html?ana=from_rss. Take it for what you will, I've never heard of 24/7 Wall Street.

Texan



"I have always imagined that Paradise will be a kind of library."
User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5374 posts, RR: 7
Reply 6, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5850 times:

From the headlines: RASM down 11%; CASM down 13%. If those lines cross north of zero, UA will have disproven the old "you can't shrink to profitability" canard.  Smile

Now to read the details ...



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineCHRISBA777ER From UK - England, joined Mar 2001, 5964 posts, RR: 62
Reply 7, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5850 times:

Ouch.

Still - no pain, no gain and all that.



What do you mean you dont have any bourbon? Do you know how far it is to Houston? What kind of airline is this???
User currently offlineJohnClipper From Hong Kong, joined Aug 2005, 837 posts, RR: 0
Reply 8, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5815 times:

DL annouced they lost $794 million...

User currently offlineLAXdude1023 From India, joined Sep 2006, 7512 posts, RR: 24
Reply 9, posted (5 years 3 months 1 week 5 days 19 hours ago) and read 5806 times:



Quoting DescendVia (Reply 4):
Would you all stop it with that junk..... As bad as they are, UA is still stronger then other major carriers right now.

That really a matter of opinion. I dont think UA is going to disappear or go under, but saying they are stronger than the other major carriers is pretty false.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 10, posted (5 years 3 months 1 week 5 days 18 hours ago) and read 5640 times:

It is better than many expected ($4 actual per share vs $4.45 consensus)...using mark-to-market standards, so I guess that is a "win". But I am afraid that the real stress test will be how contract negotiations play out over the next 12 to 24 months.

User currently offlineLAXDESI From United States of America, joined May 2005, 5086 posts, RR: 48
Reply 11, posted (5 years 3 months 1 week 5 days 16 hours ago) and read 5357 times:

From the link in OP:
First quarter consolidated fuel expense, excluding hedge impacts, was down 52%, or $983 million year-over-year.


Consolidated ASM down 11.3%, PRASM down 11.1%, and CASM down 13%. Looks like UA did a fine job cutting capacity in advance of slowdown. Airlines certainly need the lower fuel prices to survive the current recession.

UA's typical depreciation expense(non-cash) is around $250 million; therefore, on a GAPP basis, the operating cash loss should be around $130 million.


User currently offlineGlbltrvlr From United States of America, joined Oct 2007, 699 posts, RR: 0
Reply 12, posted (5 years 3 months 1 week 5 days 16 hours ago) and read 5299 times:

More stats starting to circulate:

- Premium traffic down 30%, industry is down 20%, impacts intl premium focus strategy
- Intl rev down 15% (per seat), Pacific rev down 16.3%
- Domestic rev down 10%

http://online.wsj.com/article/BT-CO-20090421-713070.html


User currently offlineDescendVia From , joined Dec 1969, posts, RR:
Reply 13, posted (5 years 3 months 1 week 5 days 14 hours ago) and read 5121 times:



Quoting LAXdude1023 (Reply 9):

Left out some....... So I meant to say "stronger then some other major........"


User currently offlineKoruman From , joined Dec 1969, posts, RR:
Reply 14, posted (5 years 3 months 1 week 5 days 14 hours ago) and read 5040 times:

United Airlines - and every other major US carrier - really needs to be allowed to go into total liquidation.

I should be the sort of passenger demographic airlines make their money from. I am based in Australia, but fly 30-40 First Class sectors in the USA each year.

But because every US airline has incompetent managers trapped in a "charge-for-everything-and dilute-the-product" mentality, what I now get is a crappy economy-class quality product in a wide seat. Trans-continental meals are "salad or sandwich?"

The seats which should deliver the profits (First Class and Economy Plus) are given away to frequent flyers, and Economy Class basically is pitched at ultra-low yield passengers.

And the luggage situation is crazy. By all means charge for it, but also enforce it by limiting carry-on to the international 18 pound limit, and weighing every piece, and charging double the normal baggage fee for overweight bags which the passenger tried to smuggle on as carry-on.

My airline of choice internationally is Air New Zealand, which grows its yields and profits by things like having free AVOD IFE on all flights over three hours, free meals on all flights over two hours, etc. The least profitable passengers balk at paying $10 more than on competing LCCs and go eleswhere, which is fine. And the airline makes profits because the product is being IMPROVED as a way of growing yields.


User currently offlinePlateMan From United States of America, joined May 2007, 922 posts, RR: 0
Reply 15, posted (5 years 3 months 1 week 5 days 14 hours ago) and read 4996 times:



Quoting LAXdude1023 (Reply 1):
Suddenly AA's $375 mil loss doesnt seem so bad.

We need to compare apples-to-apples. AA's loss is in GAAP, while United GAAP's numbers are $382M.

Also, United's loss was less than was expected



"Explore. Dream. Discover." -Mark Twain
User currently offlineIloveboeing From United States of America, joined Oct 2005, 794 posts, RR: 0
Reply 16, posted (5 years 3 months 1 week 5 days 13 hours ago) and read 4902 times:



Quoting Koruman (Reply 14):
every US airline has incompetent managers trapped in a "charge-for-everything-and dilute-the-product" mentality,

Exactly! That's exactly what they have! Couldn't have said it better myself.

These airlines are cutting their products to the bone, while maximizing the fares. That is NOT how you run a business. Possible short-term gains will definitely be offset by massive losses in the long-run.

If you want a sustained premium for your product, you need to provide a premium product for all passengers. I would definitely be willing to pay for better service. But why should I pay for First Class, if I don't even get hot meals or PTVs on most flights?

Hot meals and PTVs are international-standard necessities (we can give the Asian carriers thanks for this) that should be on every flight in all classes.

Those people that want only the lowest fare can go to NK and WN. But these legacy carriers were built on legendary service quality.

UA used to be known for being one of the most prestigious and premium airlines in the world. But what is it now? It is becoming Greyhound, run by corrupt management, who wants to "cut, cut, cut" and "charge, charge, charge," and who "half-upgrades" its product.

And UA wonders why they report a $579 million loss. Why don't these airlines learn from GM? They were all about "maximizing profits," but they did it at the expense of market share and have gradually lost a massive amount of it. That's what these airlines are doing. "Maximizing revenue" at the expense of market share. GM is in major trouble and the airlines are going to be in the same position if they don't radically change.


User currently offlinePanamair From United States of America, joined Oct 2001, 4880 posts, RR: 25
Reply 17, posted (5 years 3 months 1 week 5 days 13 hours ago) and read 4876 times:
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Quoting Koruman (Reply 14):
My airline of choice internationally is Air New Zealand, which grows its yields and profits by things like having free AVOD IFE on all flights over three hours, free meals on all flights over two hours, etc. The least profitable passengers balk at paying $10 more than on competing LCCs and go eleswhere, which is fine. And the airline makes profits because the product is being IMPROVED as a way of growing yields.

Is there actually any factual evidence to support the fact that NZ derives profits and high yields from offering free AVOD IFE and free food as opposed to simply being the most convenient way to get to NZ (there really aren't that many choices of airlines to get one to NZ directly)...

If product was the driver of profits, why would NZ ever need to offer discount fares anywhere? Why does NZ constantly have sales at its UK website and touting their "cheap fares"? They are often one of the cheapest (if not cheapest) options in all classes between LHR and LAX, or between LHR and HKG....


User currently offlinePanamair From United States of America, joined Oct 2001, 4880 posts, RR: 25
Reply 18, posted (5 years 3 months 1 week 5 days 13 hours ago) and read 4826 times:
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Quoting Iloveboeing (Reply 16):
Hot meals and PTVs are international-standard necessities

Necessities? Then how did LH survive all these years and pull in huge profits with absolutely NO PTVs in long-haul economy?

Quoting Iloveboeing (Reply 16):
But these legacy carriers were built on legendary service quality.

It's time to wake up. As much as I love to have 1960s Pan Am service on all of my flights, the reality is that air transportation is a price-driven commodity today, and is becoming increasingly so, not just with Americans, but with an ever-expanding portion of the world's population.

Quoting Iloveboeing (Reply 16):
That's what these airlines are doing. "Maximizing revenue" at the expense of market share

You're saying that market share should be the focus of airline management? You do understand that market share can also be obtained by cutting fares (in fact that is the most common way for companies to increase their market share)? Market share increase is obtained through lower prices far quicker and at much bigger portions than through product improvement, particularly in the airline business. Fact is, the number of people who will switch airlines simply due to product, is dwarfed by the sheer number who will switch due to lower prices.


User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 24
Reply 19, posted (5 years 3 months 1 week 5 days 12 hours ago) and read 4790 times:



Quoting RampRat74 (Thread starter):
United Loses $579 Million In 1Q09

...and Tilton is still around?! When are they going to get rid of that dude?



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineStratoduck From United States of America, joined Nov 2008, 25 posts, RR: 0
Reply 20, posted (5 years 3 months 1 week 5 days 11 hours ago) and read 4643 times:

What caught my attention was the cost and revenue of mainline vs. The regional service. The revenue per seat mile was about 40% higher on the regional side, but so was the cost. So United is charging and getting a healthy fare on regional routes, but paying through the nose for it.

User currently offlineNCB From , joined Dec 1969, posts, RR:
Reply 21, posted (5 years 3 months 1 week 5 days 11 hours ago) and read 4610 times:



Quoting DescendVia (Reply 4):
Would you all stop it with that junk..... As bad as they are, UA is still stronger then other major carriers right now.

The real test will be this fall into winter when management try to break the unions.

They have 2.5 billions of cash... great... but at a rate of 500 mil loss per quarter, UA will be cashless in 6 quarters... and the summer is coming => oil is going to rise again, though maybe not as drastically as last summer...


User currently offlineCommavia From United States of America, joined Apr 2005, 11463 posts, RR: 61
Reply 22, posted (5 years 3 months 1 week 5 days 11 hours ago) and read 4550 times:



Quoting Adam42185 (Reply 2):
How bad is this loss in the greater scheme of things? Can United bounce back from this or are they on their way out?

Well, they generated positive cash flow from operations for the quarter, and in terms of short- to medium-term survival (though not necessarily long-term success, per se), the cash flow number is definitely the more important one.

Quoting Iloveboeing (Reply 16):
That is NOT how you run a business.

So how would you run the business, exactly? Pay more to give customers better service, and lower the fares? Yeah - sounds like a great business model to me.

Quoting Iloveboeing (Reply 16):
Possible short-term gains will definitely be offset by massive losses in the long-run.

So how, exactly, are cutting costs and increasing revenue as much as possible "definitely" going to lead to "massive losses?" That's some interesting logic.

Quoting Panamair (Reply 18):
As much as I love to have 1960s Pan Am service on all of my flights, the reality is that air transportation is a price-driven commodity today, and is becoming increasingly so, not just with Americans, but with an ever-expanding portion of the world's population.

Exactly. For the vast majority of air travelers, it is just a bus with wings. They will complain and go on and on about the fees, the nickel and diming, the bad service, the cramped seats, the no food, and on and on. But when it comes down to it, they'd rather pay a few dollars less.

As long as that is how the public behaves, this is precisely what they'll get.


User currently offlineSydscott From Australia, joined Oct 2003, 2930 posts, RR: 20
Reply 23, posted (5 years 3 months 1 week 5 days 11 hours ago) and read 4512 times:

You've all missed the most important paragraph from the thread starters link.

Fair use exerpt;

"During the first quarter, the company generated $426 million of positive operating cash flow and $347 million of positive free cash flow, defined as operating cash flow less capital expenditures. Both operating cash flow and free cash flow for the quarter include $395 million in returns of hedge collateral and $160 million associated with the Chicago O'Hare cargo facility relocation. The company had scheduled debt and net capital lease payments of $264 million during the quarter and non-aircraft capital expenditures of $79 million."

So UAL was cash flow negative from its operations in the quarter, excluding the financing transactions, but not by all that much. That's a pretty decent result.


User currently offlineApodino From United States of America, joined Apr 2005, 4234 posts, RR: 6
Reply 24, posted (5 years 3 months 1 week 5 days 11 hours ago) and read 4483 times:

The noteable thing to me that I noticed in the call is the premium seating. Because of the way Uniteds planes are configured, they are more reliant on premium seating than other carriers, because they don't have as many Y seats to generate revenue. With this traffic down, people aren't paying more for these seats, and United is exposed to this more than any other carrier. This really will make it tough for them.

25 Lexy : There's only so much upgrading you can do when the majority of your domestic services are carried out on a 50 seat CRJ. Let's be real here. Most of t
26 Flyguy89 : It really is sad how far United has fallen. I feel United still has a positive brand but they really need to get their act together and focus themselv
27 FL787 : The new configurations should help with this problem. The 777 goes from 10/12F to 8F and C goes from 45/49C to 40C. The 767 goes from 10F to 6F and 3
28 Bennett123 : Looking at this whole issue of price vs service, I looked on Expedia at London to NYC, going on 21 May and returning a week later. The following price
29 Commavia : The nonstop difference between BA and CO and AA for the nonstop is close to $150. That may not seem like a lot to you, but there are plenty of U.S. c
30 VANGUARD737 : Yea...you got it. Their loss is because Susie Q. Flyer doesn't care for United's $5 snack boxes. And because Johnnie T. Jetsetter has to pay for his
31 Ual777 : If oil rises some it will actually help UA a little due to their fuel hedges. It will be interesting to see how the rest of the year pans out, but it
32 DC8FanJet : I would hope that anyone on A-net knows that regional service costs more per seat mile than long haul...basic airline economics... I think this is a
33 Lexy : I'm talking about top 100 domestic markets. They don't come close. As for the 70 seaters, they are all regionals flying around as UA. Not nearly the
34 DocLightning : I think this is VX's model. And it's starting to work. I usually find that they are the second cheapest flight, usually after WN. But the extra $15 o
35 UAL777 : VX is a slave ship that is riding on the backs of its' employees. I will NEVER step foot on one of their aircraft (in any capacity) as long as they p
36 DocLightning : WN's employees seem happy enough and they aren't getting paid as well as the Majors.
37 United1 : Actualy they are not downgrading it to a 772 it is remaining a 744 as is LAX-SYD. You happened to be unlucky enough to get one of the 744s that hasnt
38 United1 : Those 70 seat jets (especially the Embraers) are more comfortable then allot of mainline aircraft and allow every US airline to serve markets that si
39 UAL777 : WN is not VX. 6 year 737 captain at WN makes $185 per flight hour. A VX A320 Captain makes $120.
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