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LAXintl
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United reports 2017Q3 earnings

Wed Oct 18, 2017 8:34 pm

o UAL reported third-quarter net income of $637 million, diluted earnings per share of $2.12, pre-tax earnings of approximately $1.0 billion and pre-tax margin of 9.9 percent.
o Excluding special charges, UAL reported third-quarter net income of $669 million, diluted earnings per share of $2.22, pre-tax earnings of $1.0 billion and pre-tax margin of 10.4 percent.

Details in press release:
http://newsroom.united.com/2017-10-18-U ... erformance

=

Earnings call in the morning.

As expected, industry earnings are down from '16 peak. Cost rising, as revenue slips. Bad omen.
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727200
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 8:36 pm

Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.
 
jumbojet
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 8:51 pm

727200 wrote:
Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.


The #s will obviously be impacted some by the hurricane but lets not jump to conclusions and blame Harvey for everything. Further analysis is needed.
 
727200
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 8:53 pm

Didn't blame Harvey for anything or imply it was responsible for anything. Just pointed out that it DID impact the numbers; estimates being the loss for the 3-4 shutdown days was in excess of $300M per analysts.
 
United1
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:01 pm

727200 wrote:
Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.


Indeed...if you add back in the revenue UA lost due to IAH being shut down for a week UA would have been slightly up in terms of revenue for the quarter. YTD even with the impact of the hurricane UA generated ~800 million in additional revenue vs 2016.

The storms combined reduced pretax income by $185 million and revenue by $210 million.....
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jumbojet
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:05 pm

United1 wrote:
727200 wrote:
Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.


Indeed...if you add back in the revenue UA lost due to IAH being shut down for a week UA would have been slightly up in terms of revenue for the quarter. YTD even with the impact of the hurricane UA generated ~800 million in additional revenue vs 2016.


I would love to see the actual math that was used to figure out exactly how much revenue UA lost as a result of Harvey. Did UA publicly announce what the lost revenue actually was and if not, will it be announced at tomorrow's earnings call? Or, is this all just conjecture at this point?
 
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LAXintl
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:08 pm

UA's pre-tax operating income dropped from $1.6Bil in 2016 tp $1Bil in 2017.

There is much more at play than estimated $185 million weather effect. Overall UA cost rose, and its yields dropped. Its being squeezed at both ends, which means it op margin went from 16.8% in '16 to 11.1 in '17. Not good.
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United1
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:09 pm

jumbojet wrote:
United1 wrote:
727200 wrote:
Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.


Indeed...if you add back in the revenue UA lost due to IAH being shut down for a week UA would have been slightly up in terms of revenue for the quarter. YTD even with the impact of the hurricane UA generated ~800 million in additional revenue vs 2016.


I would love to see the actual math that was used to figure out exactly how much revenue UA lost as a result of Harvey. Did UA publicly announce what the lost revenue actually was and if not, will it be announced at tomorrow's earnings call? Or, is this all just conjecture at this point?


I edited my previous post before I saw your post....

The storms combined reduced pretax income by $185 million and revenue by $210 million.....
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United1
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:26 pm

LAXintl wrote:
UA's pre-tax operating income dropped from $1.6Bil in 2016 tp $1Bil in 2017.

There is much more at play than estimated $185 million weather effect. Overall UA cost rose, and its yields dropped. Its being squeezed at both ends, which means it op margin went from 16.8% in '16 to 11.1 in '17. Not good.


That's just looking at a single quarter which is never a good read on the financial health of any company.....the sky isn't quite falling yet for any US airline.

Looking at a 12 month trailing period UAs op margin is down about 15%. Which is actually better than DL down around 22% for the same time period.
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jumbojet
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:33 pm

I'm not at all knocking United here by the way, I am only interested in real data. A profit is a profit and its still a very healthy one by the way.
 
jbs2886
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:34 pm

jumbojet wrote:
United1 wrote:
727200 wrote:
Don't forget there was a little thing called 'hurricane' that shut down 2nd largest hub, and even though it was back up in couple of days, effects still being felt. That will decrease your revenue very quickly.


Indeed...if you add back in the revenue UA lost due to IAH being shut down for a week UA would have been slightly up in terms of revenue for the quarter. YTD even with the impact of the hurricane UA generated ~800 million in additional revenue vs 2016.


I would love to see the actual math that was used to figure out exactly how much revenue UA lost as a result of Harvey. Did UA publicly announce what the lost revenue actually was and if not, will it be announced at tomorrow's earnings call? Or, is this all just conjecture at this point?


You could actually read the report? They put out those numbers...
 
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:37 pm

jbs2886 wrote:
jumbojet wrote:
United1 wrote:

Indeed...if you add back in the revenue UA lost due to IAH being shut down for a week UA would have been slightly up in terms of revenue for the quarter. YTD even with the impact of the hurricane UA generated ~800 million in additional revenue vs 2016.


I would love to see the actual math that was used to figure out exactly how much revenue UA lost as a result of Harvey. Did UA publicly announce what the lost revenue actually was and if not, will it be announced at tomorrow's earnings call? Or, is this all just conjecture at this point?


You could actually read the report? They put out those numbers...


would you be so kind as to post a link for me? A little help please. thanks!! I like reading the earnings calls. I read the highlights for DL's and will read UA's if its already out.

At any rate, a big congratulations to UA employees for a great quarter. Yes, I know I can google it but do UA employees have profit sharing? How much did they get this quarter?
 
United1
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 9:54 pm

jumbojet wrote:
jbs2886 wrote:
jumbojet wrote:

I would love to see the actual math that was used to figure out exactly how much revenue UA lost as a result of Harvey. Did UA publicly announce what the lost revenue actually was and if not, will it be announced at tomorrow's earnings call? Or, is this all just conjecture at this point?


You could actually read the report? They put out those numbers...


would you be so kind as to post a link for me? A little help please. thanks!! I like reading the earnings calls. I read the highlights for DL's and will read UA's if its already out.

At any rate, a big congratulations to UA employees for a great quarter. Yes, I know I can google it but do UA employees have profit sharing? How much did they get this quarter?


The link is in the first post of the thread but here you go....

http://newsroom.united.com/2017-10-18-U ... erformance

Yes UA employees get profit sharing...expected to be around $96 million for the year in addition to the $57 million in operational bonuses already earned.
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ldvaviation
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 10:03 pm

LAXintl wrote:
Overall UA cost rose, and its yields dropped. Its being squeezed at both ends, which means it op margin went from 16.8% in '16 to 11.1 in '17. Not good.


Natural market share
 
tphuang
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 10:19 pm

They are forecasting pre tax margin of 3 to 5 percent for q4. That seems to be really low. I don't think you can blame it all on hurricane. Aa wn JetBlue and spirit all have huge exposure also. Let's see if they have the same low margin.
 
MIflyer12
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 10:32 pm

United1 wrote:
Looking at a 12 month trailing period UAs op margin is down about 15%. Which is actually better than DL down around 22% for the same time period.


Yeh, Delta is down more - but it made 70% more operating income than United did in the quarter on 12% more operating revenue. (Where's the guy asking when United is going to be the biggest airline?!) Keep up that Smisek tradition of rationalizing under-performance.
 
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 11:23 pm

MIflyer12 wrote:
United1 wrote:
Looking at a 12 month trailing period UAs op margin is down about 15%. Which is actually better than DL down around 22% for the same time period.


Yeh, Delta is down more - but it made 70% more operating income than United did in the quarter on 12% more operating revenue. (Where's the guy asking when United is going to be the biggest airline?!) Keep up that Smisek tradition of rationalizing under-performance.


I'm not rationalising rationalising under-performance I'm simply comparing that one stat between carriers...both airlines are down and AA will be as well. That one stat doesn't paint the entire picture for any carrier so no need to get your knickers in a bunch.
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FlyHossD
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 11:34 pm

LAXintl wrote:
...There is much more at play than estimated $185 million weather effect. Overall UA cost rose, and its yields dropped. Its being squeezed at both ends, which means it op margin went from 16.8% in '16 to 11.1 in '17. Not good.


I remember a time when an 11% percent margin would have been cause for celebration by any airline.

When does AA report for the quarter?
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AA747123
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Re: United reports 2017Q3 earnings

Wed Oct 18, 2017 11:50 pm

FlyHossD wrote:
LAXintl wrote:
...There is much more at play than estimated $185 million weather effect. Overall UA cost rose, and its yields dropped. Its being squeezed at both ends, which means it op margin went from 16.8% in '16 to 11.1 in '17. Not good.


I remember a time when an 11% percent margin would have been cause for celebration by any airline.

When does AA report for the quarter?


AA will report on 26/10. Should be interesting, AA usually falls somewhere between UA and DL
 
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LAXintl
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:19 am

Problem is that not that headline earnings are trailing 2016, but critical supporting numbers like RASM and CASM are both moving in the wrong direction as well.

The market is seeing this with JP Morgan, Raymond James and Buckingham all downgrading UAL in the last 30-days, while peers DL has been received upgrade by Imperial Capital and AAL receiving two upgrades from Barclays and Raymond James along with a downgrade from JP Morgan.
As an analyst put it, UAL is a bit of a canary in the coal mine being the weakest of the major 3.
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:32 am

UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?
 
SFOtoORD
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:52 am

Flighty wrote:
UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?


I think Kirby would have been right 2-3 years ago that United had ceded too much market share and could expand capacity. The problem now is that they are doing this too late in the economic cycle. The good news is that they have enough old aircraft and deferred wide bodies that they can ratchet down capacity without too much pain.
 
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:09 am

Flighty wrote:
UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?


The domestic US market is outperforming international flying at the moment. UA is underexposed domestically and over exposed internationally.
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:13 am

Varsity1 wrote:
Flighty wrote:
UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?


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.
 
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 12:00 pm

ldvaviation wrote:
Natural market share


:lol:

Flighty wrote:
UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?

SFOtoORD wrote:
I think Kirby would have been right 2-3 years ago that United had ceded too much market share and could expand capacity. The problem now is that they are doing this too late in the economic cycle. The good news is that they have enough old aircraft and deferred wide bodies that they can ratchet down capacity without too much pain.


It is ostensibly true that for a variety of reasons - Smisek malaise, fleet mismatch, merger integration debacle, etc. - United steadily lost its "natural market share" (as the term has been used by management) in the domestic market versus AA, Delta and Southwest. On the other hand, it may also be equally true that now, at this point, getting that "natural market share" back is going to be particularly erosive to financial performance because (a) competition has intensified and rivals have solidified their positions, and (b) we are either at or past the top of this industry cycle.

I'm not sure that fully tells the story of the margin differential for United versus most of its large peers, but I think there are some persuasive arguments for that being at least a big part of the story here. Time will tell.
 
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exunited
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 1:33 pm

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.
 
commavia
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 1:51 pm

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.


:checkmark:

It is quite apparent that United's management - like the management teams at AA, Delta and Southwest - are starting to think much more long-term, and are messaging as such, both internally and externally. All four of these companies are on more stable financial footing than they've ever been and making investments - including in their employees - that clearly have long payback horizons. That said, I agree that United arguably has the biggest "hole" to climb out of because of the damage done during the 2012-2015 timeframe, and that only adds to the "investment" required to rebuild its brand, its network and its customer relationships.

The question remains how much patience Wall St will have for this "investment." This was discussed recently in another thread talking about United's rate of capacity growth relative to the industry. 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?
 
caverunner17
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 2:53 pm

jumbojet wrote:
Varsity1 wrote:
Flighty wrote:
UAL is showing substantially weaker performance than its peers. Personally, I don't get it. They need to cut the marginal flying. Then Kirby is out there saying they will grow. He's not a guy that likes to waste money. I don't get what is going on. Does UAL think things will get better?


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.
 
CriticalPoint
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 3:01 pm

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.


This about sums it up.
 
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LAXintl
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 3:01 pm

UAL shares down about 5-6% as of 11am eastern after the 3Q results and forecast of continuing PRASM decline in 4Q.
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CriticalPoint
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 3:04 pm

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.


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?
 
ldvaviation
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 3:30 pm

commavia wrote:
The question remains how much patience Wall St will have for this "investment." This was discussed recently in another thread talking about United's rate of capacity growth relative to the industry. 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?


Always so even-handed. (I like that about you.)

But something is wrong here. There is good expansion which does not come at the cost of all RASM growth (Delta at Seattle and even AA at LAX). Then, there's what seems to be happening at United.

(Kirby seems to have run out of tricks.)
 
SWADawg
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:04 pm

LAXintl wrote:
UAL shares down about 5-6% as of 11am eastern after the 3Q results and forecast of continuing PRASM decline in 4Q.

Down nearly $8.00 per share right now. Is the earnings call still going on? What did Munoz and Kirby say, (or not say) that caused the mass exodus of investors in UAL. I'm picturing the famous scene from Trading Places. "SELL MORTIMER SELL!"
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toxtethogrady
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:09 pm

LAXintl wrote:
diluted earnings per share of $2.12


Given Hurricane Harvey, I'd say the earnings were diluted... :duck:
 
apodino
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:09 pm

I was about to say...the stock is taking a beating. American is down a bit too but not like United. Southwest is up and Delta is flat.

Something must have been said on the call that investors noticed, and thus you have this huge sell off, on a day that oil is also down which is normally bullish for airline stocks.
 
B737900ER
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:10 pm

It’s not as if UA has a problem filling either cabin on their flights. Everything seems full all the time. So the issue falls squarely with revenue management. As for cost, everyone complains about the shortfalls of UA, so UA in turn addressed those shortfalls, which cost money. Stretched across the entire operation those costs add up. The technology, customer experience, and employee environment were dreadful just a few short years ago, but inevitably, four times a year we are here talking about how UA must address their costs. That would mean going back to the way things used to be. Is that what anyone wants?

The turnaround is an investment. Good investments take time to mature, but pay off better in the long run. Wall Street is conditioned to make money now. Time will tell who wins.
 
apodino
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:20 pm

I was doing a bit more research. Wall Street appears to be reacting to an Oscar Munoz statement saying "We dug ourselves a hole".
 
flyguy84
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:28 pm

apodino wrote:
I was doing a bit more research. Wall Street appears to be reacting to an Oscar Munoz statement saying "We dug ourselves a hole".

By we he meant Smisek and Co. will take awhile to undo all the damage. Won’t happen overnight.
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stlgph
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:34 pm

SWADawg wrote:
LAXintl wrote:
UAL shares down about 5-6% as of 11am eastern after the 3Q results and forecast of continuing PRASM decline in 4Q.

Down nearly $8.00 per share right now. Is the earnings call still going on? What did Munoz and Kirby say, (or not say) that caused the mass exodus of investors in UAL. I'm picturing the famous scene from Trading Places. "SELL MORTIMER SELL!"


That's nice but a dominant majority of shareholders are in it for the long haul, and aren't day trading it like it's a penny stock.

In 2009, I bought a ton at $3.26 a share.
In 2010, I increased my position 50% at $13.01 a share and again 2011 at roughly $15.01 a share.

It's now $60.07 a share.

I'm far from concerned.
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jetblastdubai
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:41 pm

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.
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LAXintl
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:42 pm

Not pretty....


United Continental drops most in 8 years after outlook disappoints
https://www.ft.com/content/e7ef1623-64f ... 08f62ceee4?

United Continental shares fell 12 per cent on Thursday as the carrier failed to persuade Wall Street that it can combat rising costs and hold its own in a price war with low cost airlines in the US.

The share price move – the biggest one day decline in 8 years – came after the Chicago-based airline forecast in a Wednesday earnings release that a closely watched metric for unit revenues would fall by 1 to 3 per cent year-on-year in the fourth quarter. The outlook comes at a time when labour and fuel costs are rising and the airline is facing brutal competition from so-called ultra low cost carriers.

The shares fell during the carrier’s morning investor call on Thursday, during which chief executive Oscar Munoz parried increasingly hostile questions from analysts disappointed at the company’s profit and margin outlook and dubious about whether Mr Munoz can deliver on making the airline more competitive with rivals like Delta and American Airlines.
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 4:46 pm

ldvaviation wrote:
commavia wrote:
The question remains how much patience Wall St will have for this "investment." This was discussed recently in another thread talking about United's rate of capacity growth relative to the industry. 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?


Always so even-handed. (I like that about you.)

But something is wrong here. There is good expansion which does not come at the cost of all RASM growth (Delta at Seattle and even AA at LAX). Then, there's what seems to be happening at United.

(Kirby seems to have run out of tricks.)


I fully agree that Commavia is one of the more educated and balanced posters on this anet. A lot of people could take note.

There's a big difference between Delta's growth in Seattle and United's current growth. Delta's growth in Seattle was funded by weaker, underperforming markets already in their network. Markets like MEM and CVG were picked further apart and the aircraft freed up from those markets went to the Seattle growth plan. This meant little-to-no incremental capacity growth at the corporate level, but improved revenue and margins at the corporate level.

United is currently trying to growth their net system, and it's probably safe to assume that the new growth is coming in worse than the existing network. Otherwise, they should have been flying the new stuff over current stuff in the first place. The assumption is that this new robust network and connectivity will pay dividends to the system as a whole, but that assumptions is being challenged by Wall Street. They want to see faster improvements and are rightly questioning the strategy. United believes in it's strategy and is rightly defending it saying it's a long-term investment. How this all plays out remains to be seen.
 
SWADawg
Posts: 522
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:13 pm

I know that the CEO and Board of Directors have a fiduciary responsibility to Wall Street and their investors, but at the end of the day, you as a management team are paid to make decisions on what's in the Airlines' long term best interest and unfortunately that is going to mean making the investors on Wall Street angry. I think that UAL finally has some smart people at the top with a long term strategic plan for what they want United to be, but it's going to take more than just a couple of fiscal quarters for Wall Street to start to see any sort of payoff. I think long term patient investors will be rewarded over the long run but the typical hedge fund day trading investor is probably not going to have the patience to wait for their investments to show a positive return on capital. Thus, the sell off we're seeing today.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
flyguy84
Posts: 770
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:25 pm

SWADawg wrote:
I know that the CEO and Board of Directors have a fiduciary responsibility to Wall Street and their investors, but at the end of the day, you as a management team are paid to make decisions on what's in the Airlines' long term best interest and unfortunately that is going to mean making the investors on Wall Street angry. I think that UAL finally has some smart people at the top with a long term strategic plan for what they want United to be, but it's going to take more than just a couple of fiscal quarters for Wall Street to start to see any sort of payoff. I think long term patient investors will be rewarded over the long run but the typical hedge fund day trading investor is probably not going to have the patience to wait for their investments to show a positive return on capital. Thus, the sell off we're seeing today.

This is accurate. The damage can’t be repaired overnight. United has come a long way, but Smisek did long lasting damage. It won’t be easy but this management team is doing the right things. Investors live in the moment and are very short sighted.
SFO
 
CriticalPoint
Posts: 577
Joined: Thu Jan 19, 2017 5:01 pm

Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:27 pm

SWADawg wrote:
I know that the CEO and Board of Directors have a fiduciary responsibility to Wall Street and their investors, but at the end of the day, you as a management team are paid to make decisions on what's in the Airlines' long term best interest and unfortunately that is going to mean making the investors on Wall Street angry. I think that UAL finally has some smart people at the top with a long term strategic plan for what they want United to be, but it's going to take more than just a couple of fiscal quarters for Wall Street to start to see any sort of payoff. I think long term patient investors will be rewarded over the long run but the typical hedge fund day trading investor is probably not going to have the patience to wait for their investments to show a positive return on capital. Thus, the sell off we're seeing today.


I agree 100% UA managements turn around plan is a multi year push to regain market share and premium flyers who defected during the smizek era.

By 2020 we should start seeing returns.....if not then UA is in trouble.
 
stlgph
Posts: 10974
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:34 pm

flyguy84 wrote:
SWADawg wrote:
I know that the CEO and Board of Directors have a fiduciary responsibility to Wall Street and their investors, but at the end of the day, you as a management team are paid to make decisions on what's in the Airlines' long term best interest and unfortunately that is going to mean making the investors on Wall Street angry. I think that UAL finally has some smart people at the top with a long term strategic plan for what they want United to be, but it's going to take more than just a couple of fiscal quarters for Wall Street to start to see any sort of payoff. I think long term patient investors will be rewarded over the long run but the typical hedge fund day trading investor is probably not going to have the patience to wait for their investments to show a positive return on capital. Thus, the sell off we're seeing today.

This is accurate. The damage can’t be repaired overnight. United has come a long way, but Smisek did long lasting damage. It won’t be easy but this management team is doing the right things. Investors live in the moment and are very short sighted.


Incorrect. Not all investors are very short sighted.
if assumptions could fly, airliners.net would be the world's busiest airport
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:43 pm

ldvaviation wrote:
Always so even-handed.


:)

SWADawg wrote:
I know that the CEO and Board of Directors have a fiduciary responsibility to Wall Street and their investors, but at the end of the day, you as a management team are paid to make decisions on what's in the Airlines' long term best interest and unfortunately that is going to mean making the investors on Wall Street angry. I think that UAL finally has some smart people at the top with a long term strategic plan for what they want United to be, but it's going to take more than just a couple of fiscal quarters for Wall Street to start to see any sort of payoff. I think long term patient investors will be rewarded over the long run but the typical hedge fund day trading investor is probably not going to have the patience to wait for their investments to show a positive return on capital. Thus, the sell off we're seeing today.


I agree. This, too, is a big part of the story. The commentary today from United's CEO was shockingly honest and realistic - the company is, indeed, climbing out of a deep hole, and that will take time. But I also agree that United today enjoys a level of strategic vision, and, hopefully, prudent financial management that it's arguably had in years (and possibly decades). Let's hope it pays off.

CriticalPoint wrote:
By 2020 we should start seeing returns.....if not then UA is in trouble.


I think that's the big question mark - at what point do investors say, "I can no longer wait to see the improvement materialize." I agree that there are plenty of investors willing to give Munoz and Kirby time. The huge open question is how much time?

stlgph wrote:
Incorrect. Not all investors are very short sighted.


:checkmark:

It's important not to generalize too much. There are lots of investors with longer time horizons, and willing to be patient with airlines unlike in the past. Indeed, one of these longer-term airline investors is arguably the world's most famous equity investor, Msr. Buffett.
 
FlyHossD
Posts: 1921
Joined: Mon Nov 02, 2009 3:45 pm

Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:47 pm

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.
My statements do not represent my former employer or my current employer and are my opinions only.
 
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ual747den
Posts: 1603
Joined: Sat Dec 27, 2003 1:29 pm

Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:53 pm

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.


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.
Frontier Airlines - Low Fares Done Right
 
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LAXintl
Topic Author
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Re: United reports 2017Q3 earnings

Thu Oct 19, 2017 5:54 pm

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
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