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LAXintl
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United Airlines post Q2 2020 Earnings

Tue Jul 21, 2020 11:08 pm

The most challenging quarter in the companies 94-year history as they put it in their results release.


> Net loss of $1.6 billion, and an adjusted net loss of $2.6 billion.
> Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year.
> Total liquidity approximately $15.2 billion.
> Cash burn during the second quarter averaged $40 mil/day


https://hub.united.com/2020-07-21-unite ... 47006.html

Conference call tomorrow AM. Lets see what the commentary is.
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kiowa
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Re: United Airlines post Q2 2020 Earnings

Tue Jul 21, 2020 11:39 pm

“Challenging “. Subtle word
 
jmc1975
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 2:41 am

kiowa wrote:
“Challenging “. Subtle word

Necaderous is more like it.
.......
 
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UPlog
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 3:39 am

Cargo certainly was impressive -- revenue up $107mil / 36% in the quarter on such a small fraction of operated flights during the quarter.
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jayunited
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 4:12 am

jmc1975 wrote:
kiowa wrote:
“Challenging “. Subtle word

Necaderous is more like it.



No matter the word used United did the best we could under extremely difficult circumstances.

Since the beginning of this crisis Scott Kirby has always given employees the worst case scenario. He understood UA's position coming into this crisis and didn't sugar coat anything. He let employees know UA was probably in the worst position out of the US3 and WN but his priority was and continues to be UA's survival. He understood UA had the smallest domestic network of the US3 and WN. UA had most exposure internationally as a result of our vast international network. UA had the largest widebody fleet (215 frames pre-COVID) which could be a problem during a pandemic where demand is down 90%. And lastly UA had the highest dependency on corporate travel of the US3 and without that source of revenue UA could be in real trouble.

Kirby took a hatchet early to UA's network cutting down our operation to just 10% of our pre-COVID daily departures for most of April, and all of May. Kirby increase capacity in June to just 15% despite the fact that other airlines were adding a lot more capacity in many cases at UA hubs like EWR. United was able to cut our daily cash burn rate from approximately $100 million dollars per day to $40 million dollars per day. United was also able to reduce operating cost by 69% in Q2 2020 vs. Q2 2019. Lastly United Cargo really stepped up, as a result of our large widebody fleet Kirby understood he needed to make use of some of those aircraft, so UA started operating cargo only flights in mid March utilizing our 77Ws, and 789/78Xs. By the time we April came around UA was operating over 100 cargo only flights a week, and by May UA was operating well over 200 weekly cargo only flights. In fact our cargo only flights had increase so much UA began pulling our 788s out of storage to use on Cargo only flights. Later on in May UA received FAA approval to load cargo in the cabin which just increase our revenue potential even more. As a result of being early to the cargo only flights and being aggressive going after lucrative cargo contracts UA's cargo revenue increased 36% in Q2 2020.

Kirby has had to make some difficult decision and I know there are people on this site who dislike him. I'm not sure what he was like during his tenure at American Airlines but in my opinion he is the right person for the job here at UA. No one was expecting UA to post a net loss of $1.6B or an adjusted net loss of $2.6B, most employees that I've spoken with were expecting a number north of $4.0B. While UA and the industry has a long way to go before we get to the other side of this crisis, it is becoming clear that Kirby is the person for the job here at UA. He is not a people person like Oscar Munoz but right now we don't need a people person we need someone with the knowledge and skill to navigate this airline through what will be a challenging 3-5 year recovery.
 
Boof02671
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 1:25 pm

He was not liked at AA and was shown the door and guess you forgot the IAM had to file a lawsuit to stop his major attempt at violating their CBAs by making all ramp and CSA part time.
 
splitterz
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 2:43 pm

Boof02671 wrote:
He was not liked at AA and was shown the door and guess you forgot the IAM had to file a lawsuit to stop his major attempt at violating their CBAs by making all ramp and CSA part time.


No we didn't forget how CG and CS refuse to help the company.
 
jetmatt777
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 3:42 pm

splitterz wrote:
Boof02671 wrote:
He was not liked at AA and was shown the door and guess you forgot the IAM had to file a lawsuit to stop his major attempt at violating their CBAs by making all ramp and CSA part time.


No we didn't forget how CG and CS refuse to help the company.


Ramp and CS have all taken thousands of voluntary leaves of absences and early retirements. I think you somehow expect the lowest paid workgroup to give up more and more, these are barely middle class people who can't afford to just give and give. It's unfair to blame them for the company's position when there are many other workgroups who are paid significantly more who aren't being flexible either.
 
KarlB737
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 3:53 pm

Courtesy: Fox Business Channel

United Airlines Says More Than 6,000 employees Take Severance Packages After $1.6B Loss

https://www.foxbusiness.com/markets/united-airlines-says-more-than-6000-employees-take-severance-packages-after-1-6b-loss
 
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LAXintl
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 5:00 pm

Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=
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FlyingElvii
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 5:20 pm

LAXintl wrote:
Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=

Anything about the regionals???
 
tphuang
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 6:28 pm

LAXintl wrote:
Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=


They've certainly done a better job of preserving cash than any of other big 4.

It's quite interesting UA is project/planning for 50% pre-COVID revenue until end of 2021. That is a lot less than what I have been thinking.

How do you get to cash positive if your revenue is down 50%? The only way to go is basically minimal capex and dramatic cut in payroll (think 35 to 40%). I don't see how this can be avoided.
 
ShinyAndChrome
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 6:35 pm

tphuang wrote:
LAXintl wrote:
Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=


They've certainly done a better job of preserving cash than any of other big 4.

It's quite interesting UA is project/planning for 50% pre-COVID revenue until end of 2021. That is a lot less than what I have been thinking.

How do you get to cash positive if your revenue is down 50%? The only way to go is basically minimal capex and dramatic cut in payroll (think 35 to 40%). I don't see how this can be avoided.


IIRC, didn't UA send out WARN notices to like 45% of their frontline workforce? Obviously any actual cuts would be less than that but they're clearly considering something within that range.
 
Boof02671
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 6:42 pm

splitterz wrote:
Boof02671 wrote:
He was not liked at AA and was shown the door and guess you forgot the IAM had to file a lawsuit to stop his major attempt at violating their CBAs by making all ramp and CSA part time.


No we didn't forget how CG and CS refuse to help the company.

Guess your never worked in the industry and survived the bankruptcies. Concessions don’t help. And your information is wrong the IAM gave numerous suggestions and ideas to help UA and was rebuffed.
 
FSDan
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:22 pm

LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today


Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.
This is my signature until I think of a better one.
 
simairlinenet
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:43 pm

FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today

Wow, sounds like potentially a lot of retirements in the next few years.

The question setting this up was, "Do you expect to have more or less than 100 widebodies by 2023?" So it could be in the high 100s, we just don't know.
 
codc10
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:46 pm

FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today


Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.


Consistent with United's more bearish outlook on the industry recovery, which has been the case since early in the pandemic. All eyes on WN and AA...
 
FSDan
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:46 pm

simairlinenet wrote:
FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today

Wow, sounds like potentially a lot of retirements in the next few years.

The question setting this up was, "Do you expect to have more or less than 100 widebodies by 2023?" So it could be in the high 100s, we just don't know.


Got it. That context is very helpful!
This is my signature until I think of a better one.
 
tphuang
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:50 pm

FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today


Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.


I don't see how that's avoidable given the reduced international demand the next few years. Also, they have a lot of 772 doing domestic which I'm not sure makes sense with demand down.
 
FlyingElvii
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 7:55 pm

tphuang wrote:
FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today


Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.


I don't see how that's avoidable given the reduced international demand the next few years. Also, they have a lot of 772 doing domestic which I'm not sure makes sense with demand down.

Cheaper to keep some flying than pay for all of the cascading downgrades.
And good for Social Distancing. Most of the complaints are coming from packed planes on hub-to-hub routes.
 
tphuang
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Joined: Tue Mar 14, 2017 2:04 pm

Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 8:13 pm

Btw, one of the united slides is just devasting for AA.
They are showing that their capacity as % of 2019 is 12% but their revenue is 13% (buoyed by cargo I'm sure)
DL is at 15% and 12%
AA is at 22% and 11%

so AA flies far and away the most capacity of the big 3 and had the lowest revenue. That is shocking! We will see how accurate that is when AA's results come out. But there is a pretty good chance AA was just loading its flights with the lowest fares imaginable.
 
Alias1024
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 8:27 pm

Overall about as well as could have been expected from UA and very much in line with DLs results on the passenger side. Not surprising given the similar strategies regarding capacity and not trashing yields to chase the sliver of revenue available. Cargo side was a nice boost for UA in the quarter.

Management seems to have positioned the airline well to survive the next couple years before the pandemic is behind us.

tphuang wrote:
Btw, one of the united slides is just devasting for AA.
They are showing that their capacity as % of 2019 is 12% but their revenue is 13% (buoyed by cargo I'm sure)
DL is at 15% and 12%
AA is at 22% and 11%

so AA flies far and away the most capacity of the big 3 and had the lowest revenue. That is shocking! We will see how accurate that is when AA's results come out. But there is a pretty good chance AA was just loading its flights with the lowest fares imaginable.


I suppose that is an educated guess on UAs part, but it would be pretty shocking if AAs revenue as a percentage of last year is only 11% given the capacity they flew and Vasu Raja’s boasting about all the capacity and connectivity they kept in place while carrying ~40% of all travelers going through TSA.
It is a mistake to think you can solve any major problems with just potatoes.
 
jayunited
Posts: 2872
Joined: Sat Jan 05, 2013 12:03 am

Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 9:34 pm

tphuang wrote:
FSDan wrote:
LAXintl wrote:
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today


Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.


I don't see how that's avoidable given the reduced international demand the next few years. Also, they have a lot of 772 doing domestic which I'm not sure makes sense with demand down.



This is how rumors start, while there is nothing wrong with a rumors this one has the potential to get out of hand if left unchecked. I appreciate LAXintl summarizing the call but the comment about UA's widebodies was in response to a question that was phrased in a particular way. United is NOT going down to 100 widebodies, we are NOT retiring over 100 widebody frames although there could be quite a few frames in storage for a some time. They attempted to try and clean this up during the employee town hall a DCA captain asked about our widebody plan and since for the foreseeable future international travel will be almost nonexistent compared to pre-COVID levels. The plan for now is to leave most of them in storage, United will not increase deployment of widebodies on domestic routes although we will continue to fly cargo only routes.

In response to Tphuang comment about UA having a lot of 772s doing domestic flights. Right now 98% of the 77E fleet is parked (in fact there are days when no UA 77Es are scheduled to fly). Most times if you see a 77E flying domestically it was an upguage that was scheduled 24-48 hours in advance to provide some distance on what would otherwise have been a full flight. Of the 19 domestice HD 77As, 7 frames are in storage either at the hubs or at ROW, 2 frames are use exclusively for domestic cargo only flights. Those domestic cargo only flights operate between the hubs only and in some cases Hawaii and are use to support UA international cargo only flights. Finally the remaining 10 frames are used for passenger service on hub-hub, mainland-Hawaii, and Hawaii-Guam routes. So on a daily basis domestically there are only 10 777s scheduled for passenger service.

Another point that was brought up in the employee town hall had to do with codeshare. I guess they received several questions from employees about this AA/B6 codeshare so one employee from EWR was chosen to present a question. The question was what is United's plan for New York city, how will we respond and are we looking at codeshares. The response was UA is studying the proposed AA/B6 codeshare closely. If approved UA does expect regulators to require both airlines to give up valuable slots and gates at JFK. At which point UA fully intends to submit its application to snap up as many slots and gate as we can to get us back into JFK in a meaningful way. United is not currently looking at codesharing with any US carrier at this time. Lastly a question was asked about UA giving up gates at our current hubs ( I guess there have been rampant unchecked rumors at the hubs about UA planning to voluntarily give back gates or reject leases). UA basically squashed this rumor by telling employees UA is NOT giving up a single gate at any of our hubs or rejecting any leases on those gates we are keeping what we have because it is to difficult to reacquire gates once you give them up (case and point JFK there were no good slots available pre-COVID).

Lastly long term UA sees a way out of this crisis, and according to our leaders long term isn't UA's problem. Our problem now is Q3 2020 which will be even more challenging than Q2 2020 thanks to the recovery stalling. Don't be surprised to see UA pull back capacity in Q3 because the last thing we want is to much capacity which only costs UA more money.
 
tphuang
Posts: 5210
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 9:42 pm

jayunited wrote:
tphuang wrote:
FSDan wrote:

Wow, sounds like potentially a lot of retirements in the next few years. I'm guessing the 764s are unlikely to come back at this point, and that certain 763s and 772s will likely be leaving early. That's going to entail a lot of route cuts, which is very unfortunate. Hopefully the recovery ends up being faster than UA is currently projecting.


I don't see how that's avoidable given the reduced international demand the next few years. Also, they have a lot of 772 doing domestic which I'm not sure makes sense with demand down.



This is how rumors start, while there is nothing wrong with a rumors this one has the potential to get out of hand if left unchecked. I appreciate LAXintl summarizing the call but the comment about UA's widebodies was in response to a question that was phrased in a particular way. United is NOT going down to 100 widebodies, we are NOT retiring over 100 widebody frames although there could be quite a few frames in storage for a some time. They attempted to try and clean this up during the employee town hall a DCA captain asked about our widebody plan and since for the foreseeable future international travel will be almost nonexistent compared to pre-COVID levels. The plan for now is to leave most of them in storage, United will not increase deployment of widebodies on domestic routes although we will continue to fly cargo only routes.

In response to Tphuang comment about UA having a lot of 772s doing domestic flights. Right now 98% of the 77E fleet is parked (in fact there are days when no UA 77Es are scheduled to fly). Most times if you see a 77E flying domestically it was an upguage that was scheduled 24-48 hours in advance to provide some distance on what would otherwise have been a full flight. Of the 19 domestice HD 77As, 7 frames are in storage either at the hubs or at ROW, 2 frames are use exclusively for domestic cargo only flights. Those domestic cargo only flights operate between the hubs only and in some cases Hawaii and are use to support UA international cargo only flights. Finally the remaining 10 frames are used for passenger service on hub-hub, mainland-Hawaii, and Hawaii-Guam routes. So on a daily basis domestically there are only 10 777s scheduled for passenger service.

Another point that was brought up in the employee town hall had to do with codeshare. I guess they received several questions from employees about this AA/B6 codeshare so one employee from EWR was chosen to present a question. The question was what is United's plan for New York city, how will we respond and are we looking at codeshares. The response was UA is studying the proposed AA/B6 codeshare closely. If approved UA does expect regulators to require both airlines to give up valuable slots and gates at JFK. At which point UA fully intends to submit its application to snap up as many slots and gate as we can to get us back into JFK in a meaningful way. United is not currently looking at codesharing with any US carrier at this time. Lastly a question was asked about UA giving up gates at our current hubs ( I guess there have been rampant unchecked rumors at the hubs about UA planning to voluntarily give back gates or reject leases). UA basically squashed this rumor by telling employees UA is NOT giving up a single gate at any of our hubs or rejecting any leases on those gates we are keeping what we have because it is to difficult to reacquire gates once you give them up (case and point JFK there were no good slots available pre-COVID).

Lastly long term UA sees a way out of this crisis, and according to our leaders long term isn't UA's problem. Our problem now is Q3 2020 which will be even more challenging than Q2 2020 thanks to the recovery stalling. Don't be surprised to see UA pull back capacity in Q3 because the last thing we want is to much capacity which only costs UA more money.


Now that I re-read that part, I can see why you got alarmed. I actually missed the part about going down to 100. I'm commenting on the general premise of needing to cut routes flown by widebodies.

Also for the part about 772, I'm referring to pre-COVID. I guess i should have used "had" there.
 
simairlinenet
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 9:52 pm

Alias1024 wrote:
tphuang wrote:
Btw, one of the united slides is just devasting for AA.
They are showing that their capacity as % of 2019 is 12% but their revenue is 13% (buoyed by cargo I'm sure)
DL is at 15% and 12%
AA is at 22% and 11%

so AA flies far and away the most capacity of the big 3 and had the lowest revenue. That is shocking! We will see how accurate that is when AA's results come out. But there is a pretty good chance AA was just loading its flights with the lowest fares imaginable.


I suppose that is an educated guess on UAs part, but it would be pretty shocking if AAs revenue as a percentage of last year is only 11% given the capacity they flew and Vasu Raja’s boasting about all the capacity and connectivity they kept in place while carrying ~40% of all travelers going through TSA.

It came from Wall Street analyst estimates for American.
 
MIflyer12
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Re: United Airlines post Q2 2020 Earnings

Wed Jul 22, 2020 11:15 pm

Alias1024 wrote:
Overall about as well as could have been expected from UA and very much in line with DLs results on the passenger side. Not surprising given the similar strategies regarding capacity and not trashing yields to chase the sliver of revenue available. Cargo side was a nice boost for UA in the quarter.

Management seems to have positioned the airline well to survive the next couple years before the pandemic is behind us.

tphuang wrote:
Btw, one of the united slides is just devasting for AA.
They are showing that their capacity as % of 2019 is 12% but their revenue is 13% (buoyed by cargo I'm sure)
DL is at 15% and 12%
AA is at 22% and 11%

so AA flies far and away the most capacity of the big 3 and had the lowest revenue. That is shocking! We will see how accurate that is when AA's results come out. But there is a pretty good chance AA was just loading its flights with the lowest fares imaginable.


I suppose that is an educated guess on UAs part, but it would be pretty shocking if AAs revenue as a percentage of last year is only 11% given the capacity they flew and Vasu Raja’s boasting about all the capacity and connectivity they kept in place while carrying ~40% of all travelers going through TSA.


You'll know in about 12 hours. AA's earnings release call starts at 8:30AM EDT 7/23/20 - and surely the press release will come out before that.
 
Westerwaelder
Posts: 240
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 7:17 am

tphuang wrote:
LAXintl wrote:
Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=


They've certainly done a better job of preserving cash than any of other big 4.

It's quite interesting UA is project/planning for 50% pre-COVID revenue until end of 2021. That is a lot less than what I have been thinking.

How do you get to cash positive if your revenue is down 50%? The only way to go is basically minimal capex and dramatic cut in payroll (think 35 to 40%). I don't see how this can be avoided.


I agree, this is a stark message. Alongside the 100+ widebodies in 2023, down from ~200 now.

Maybe this can convince those prophets of a quick recovery here that keep posting TSA figures to bolster their claim that recovery will be quick and is already on the way, business travel will be back to normal soon and other such claims.
 
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calpsafltskeds
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 1:53 pm

Regarding Widebodies, according to my count UA has only 13 leased Widebodies: 8 763s, 2 764s, 3 72E. This doesn't include the 6 789s recently sold for leaseback - one would expect the terms would not make dropping those leases as possible and UA likes the 789.

Of leased widebodies, 2 763s (N657UA/N658UA), 2 764s (N76054/N76055) and 1 772E (N77014) do not have Polaris installed and one would expect those would be gone depending on lease terms.

UA has a total of 7 unconverted 763s and 4 Diamond/ITPE 772E (3 at least were to become domestic units). Then there's the small 764 fleet's 16 non-Polaris, which could potentially become transcon/Hawaii/Hub-to-Hub units or converted to freighters. The 764's are an oddball fleet due to engines and other oddities.

What would UA do with excess units? Resale market is in the toilet, leaving UA with storage, scrap or cannibalize for parts. Those that could be scrapped are probably fully paid for and depreciated. That's why keeping them parked is a good option with hopes of reusing in a couple years.

UA's additional option would be to approach Boeing and Airbus for trade in with new aircraft purchases, but to do that UA would need new units and Boeing/Airbus don't want used units in today's market.

Another potential option would be looking into EWR and JFK as a possible location for adding/upgrading transcons with excess widebodies (especially 764s and 30J 763s). Such reassignment could allow a quicker retirement of 752 RR units.
 
United1
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 4:14 pm

Westerwaelder wrote:
tphuang wrote:
LAXintl wrote:
Some random notes from earning call.

> Probably toughest period in the companies history
> No doubt will be smaller company come Oct 1st. From day one of the crisis has been transparent and direct in communication with staff
> Expect "jagged" recovery
> Demand stalled at end of June/early July as US COVID situation worsens
> Will continued to be conservative with capacity. Matching capacity to revenue
> Q3 revenue forecast down 83%
> Q3 LF will trend lower than Q2 due traffic decline and increase capacity
> See revenue plateauing in 50% range until end of 2021. Broader recovery dependent on the wide distribution of vaccines
> Need to be careful not to create too high debt load to ensure emerging strong the other end. Meantime focus cash burn priority - plan down to $25m/day in Q3
> Expects liquidity to rise to $18bil by end of Q3
> Cargo strong - another great quarter in Q3 as global widebody fleet not flying as much
> Can see widebody fleet more than 100 in 2023, but down from 200 ish today
> International clearly lagging domestic, but UA well-positioned once borders open.
> 26,000 employees took part in short term reductions, 6k opted to voluntary separation
> Have "years" to decide on fleet retirements. Can stay parked for now. A small number of PW 757s will be removed however
> Taking some 737MAX and 787s in 2020 & 2021 which already have financing. Otherwise, new deliveries pushed to 2022 and beyond
> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES

=


They've certainly done a better job of preserving cash than any of other big 4.

It's quite interesting UA is project/planning for 50% pre-COVID revenue until end of 2021. That is a lot less than what I have been thinking.

How do you get to cash positive if your revenue is down 50%? The only way to go is basically minimal capex and dramatic cut in payroll (think 35 to 40%). I don't see how this can be avoided.


I agree, this is a stark message. Alongside the 100+ widebodies in 2023, down from ~200 now.

Maybe this can convince those prophets of a quick recovery here that keep posting TSA figures to bolster their claim that recovery will be quick and is already on the way, business travel will be back to normal soon and other such claims.


UA didn't say anything about retiring widebodies or that the widebody fleet would be down:

A fair use extract from seeking alpha:

https://seekingalpha.com/article/435994 ... art=single

"Operator

From Wolfe Research we have Hunter Keay. Please go ahead.

Hunter Keay

Hi, everybody. Good morning, thank you. So you had 196 wide-bodies at year-end '19. Knowing what we know now, which admittedly isn't much, do you think you have more or less than 100 in the fleet at the end of 2023?

Andrew Nocella

I guess I'll take that. Scott described how this is going to come back. And by the way, I think our international gateways are going to comeback quicker. And I think our international gateways naturally have a lot of place that other gateways don't have, which you see in our numbers, so the answer is more.

Hunter Keay

More than 100. Okay. Got it. And then, thank you."

The only thing UA said about the fleet was the PW powered 752s would probably not be coming back but even those could be reactivated if demand increases quickly enough to justify it. UA plans on keeping it's entire fleet intact until demand becomes a bit clearer....that gives UA options to respond quickly to opportunities if they come up and lower their maintenance cost by lowering utilization. People are reading way to much into a question an analyst posed.

Don't get me wrong it would not surprise me to see some of the older 772s never come back from the desert but that is not what UA said.
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MRYapproach
Posts: 104
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 5:17 pm

LAXintl wrote:
Some random notes from earning call.

> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES


I can't believe there hasn't been more discussion about the 96% reduction in corporate travel. From what I hear locally, people are beginning to restart leisure travel. Going to see the grandparents, or group trips of recent grads to Cabo. (One of the Cabo kids tested positive, so now everyone is self-isolating. So maybe that trend will go into reverse.) People are just sick of being cooped up at home. Summer camps didn't happen, now school looks to be online only in most population centers, so some people just can't resist.

But I can't believe there aren't more people who simply HAVE to travel for their job. I get that CES-like events are a huge draw, and visiting overseas suppliers is basically impossible unless you want to stay in a hotel for 14 days after you get there. The longer this goes on, the less corporate travel will return ever. Companies are learning how to do what they always did but now via Zoom. Why would you go back to 100% travel ever again? For all the Googles and Amazons out there, most companies are either under pressure, or outright threading a needle to survive. Cutting OPEX is the name of the game, and travel is one of the first to get cut.

Even if corporate travel grows 10x from today, that's still 60% less than before the pandemic. And given the importance of corporate travel to airlines bottom lines, they are going to struggle to survive for years. Now I see why it was so easy for BA to kill their premium-heavy 747 fleet. Still makes me sad.
 
alasizon
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 5:25 pm

MRYapproach wrote:
LAXintl wrote:
Some random notes from earning call.

> Corp travel virtually non existent - down 96% in Q2. We are long way from seeing 180,000 people attend events like CES


I can't believe there hasn't been more discussion about the 96% reduction in corporate travel. From what I hear locally, people are beginning to restart leisure travel. Going to see the grandparents, or group trips of recent grads to Cabo. (One of the Cabo kids tested positive, so now everyone is self-isolating. So maybe that trend will go into reverse.) People are just sick of being cooped up at home. Summer camps didn't happen, now school looks to be online only in most population centers, so some people just can't resist.

But I can't believe there aren't more people who simply HAVE to travel for their job. I get that CES-like events are a huge draw, and visiting overseas suppliers is basically impossible unless you want to stay in a hotel for 14 days after you get there. The longer this goes on, the less corporate travel will return ever. Companies are learning how to do what they always did but now via Zoom. Why would you go back to 100% travel ever again? For all the Googles and Amazons out there, most companies are either under pressure, or outright threading a needle to survive. Cutting OPEX is the name of the game, and travel is one of the first to get cut.

Even if corporate travel grows 10x from today, that's still 60% less than before the pandemic. And given the importance of corporate travel to airlines bottom lines, they are going to struggle to survive for years. Now I see why it was so easy for BA to kill their premium-heavy 747 fleet. Still makes me sad.


It is important to note the 96% drop is UA's drop in corporate bookings (those booked under a travel agreement/B2B sales) - not a 96% drop in people traveling for business. Plenty of business travel happens without being booked under a contract.

It's also worth noting that plenty of people moved away from UA this quarter because of the fact that UA had such reduced connectivity and options so some of UA's observed drop was due to the fact that they ran such a stripped down schedule in April and May
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LAXintl
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 6:40 pm

Everyone's corporate revenue fell off a cliff.

Delta said corporate traffic which provides near 50% of its passenger revenue in recent years was down to single digits. They also said they believed corporate travel would lag 12-18 months, and was waiting on vaccines before companies felt safe putting their employees back on the road.

Its going to be an extremely slow and long road to recovery for legacy airlines without the gravy train business clients generate.
From the desert to the sea, to all of Southern California
 
User avatar
N717TW
Posts: 563
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Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 10:19 pm

LAXintl wrote:
Everyone's corporate revenue fell off a cliff.

Delta said corporate traffic which provides near 50% of its passenger revenue in recent years was down to single digits. They also said they believed corporate travel would lag 12-18 months, and wa
s waiting on vaccines before companies felt safe putting their employees back on the road.

Its going to be an extremely slow and long road to recovery for legacy airlines without the gravy train business clients generate.


That is an understatement. The recovery of business travel will be very slow given how comfortable everyone has become with online meetings. Budgets won't open up right away and there will be a push to use distance technology to prevent travel well past the the end of the pandemic lockdowns.
 
ordbosewr
Posts: 612
Joined: Thu Jun 09, 2011 8:30 pm

Re: United Airlines post Q2 2020 Earnings

Thu Jul 23, 2020 10:50 pm

N717TW wrote:
LAXintl wrote:
Everyone's corporate revenue fell off a cliff.

Delta said corporate traffic which provides near 50% of its passenger revenue in recent years was down to single digits. They also said they believed corporate travel would lag 12-18 months, and wa
s waiting on vaccines before companies felt safe putting their employees back on the road.

Its going to be an extremely slow and long road to recovery for legacy airlines without the gravy train business clients generate.


That is an understatement. The recovery of business travel will be very slow given how comfortable everyone has become with online meetings. Budgets won't open up right away and there will be a push to use distance technology to prevent travel well past the the end of the pandemic lockdowns.


My company is not making anything required for travel until there is a vaccine. I have been told 'off the record' that they will not even require many of us to go into an office until that time as well. It was explained that it is all about risk and liability (lawyers). The thinking that my company does not want to be sued if they tell an employee (non-essential) to go into an office or travel and a bad outcome happens.
That does not mean people won't travel, but you have to agree to accept the risk and say the company is not requiring you to do it.....

I have said this numerous times before, the majority of business travel is not coming back any soon.

Notice, I am not even getting into the technology and change in ways of working that this is forcing, that will be a part of the reduction, but IMHO it is not what is driving the delay in the rebound.
 
dstblj52
Posts: 459
Joined: Tue Nov 19, 2019 8:38 pm

Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 12:20 am

ordbosewr wrote:
N717TW wrote:
LAXintl wrote:
Everyone's corporate revenue fell off a cliff.

Delta said corporate traffic which provides near 50% of its passenger revenue in recent years was down to single digits. They also said they believed corporate travel would lag 12-18 months, and wa
s waiting on vaccines before companies felt safe putting their employees back on the road.

Its going to be an extremely slow and long road to recovery for legacy airlines without the gravy train business clients generate.


That is an understatement. The recovery of business travel will be very slow given how comfortable everyone has become with online meetings. Budgets won't open up right away and there will be a push to use distance technology to prevent travel well past the the end of the pandemic lockdowns.


My company is not making anything required for travel until there is a vaccine. I have been told 'off the record' that they will not even require many of us to go into an office until that time as well. It was explained that it is all about risk and liability (lawyers). The thinking that my company does not want to be sued if they tell an employee (non-essential) to go into an office or travel and a bad outcome happens.
That does not mean people won't travel, but you have to agree to accept the risk and say the company is not requiring you to do it.....

I have said this numerous times before, the majority of business travel is not coming back any soon.

Notice, I am not even getting into the technology and change in ways of working that this is forcing, that will be a part of the reduction, but IMHO it is not what is driving the delay in the rebound.

I have always thought of business travel as a tragedy of the commons situation you have to meet the customer in person because if you don't those who will end up winning the business
 
jayunited
Posts: 2872
Joined: Sat Jan 05, 2013 12:03 am

Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 1:09 am

N717TW wrote:
LAXintl wrote:
Everyone's corporate revenue fell off a cliff.

Delta said corporate traffic which provides near 50% of its passenger revenue in recent years was down to single digits. They also said they believed corporate travel would lag 12-18 months, and wa
s waiting on vaccines before companies felt safe putting their employees back on the road.

Its going to be an extremely slow and long road to recovery for legacy airlines without the gravy train business clients generate.


That is an understatement. The recovery of business travel will be very slow given how comfortable everyone has become with online meetings. Budgets won't open up right away and there will be a push to use distance technology to prevent travel well past the the end of the pandemic lockdowns.



I think you are misunderstanding what LAXintl said which is what UA said. What UA is saying is after a vaccine is in the marketplace it will still be another 12-18 months before companies would feel safe putting their employees back out on the road.

So even if by some stretch of the imagination a vaccine is out by January2021, United does not expect to see any sizable recovery in corporate travel until the follow year January 2022. That forecast is the best case scenario, the worst case scenario is we are looking at June or July of 2022 before there is any real recovery in corporate travel. That all hinges on if a vaccine is available by January and if actually works. That is the real reason for the lag time is because right now as much as people hope early vaccines work we just don't know how effective they will be if at all. What UA's corporate clients are tell us is we are not getting back out on the road until we know the vaccines actually works meaning the vaccines needs to be proven effective in the real world not just in a controlled test environment.

If the vaccines are not effective the recovery clock is reset it really is that simple. United has been up front and clear with employees and had done a great job managing expectations. Right assuming there is a vaccine in January we are looking at a 3-5 year recovery minimum.
Last edited by jayunited on Fri Jul 24, 2020 1:26 am, edited 2 times in total.
 
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N717TW
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Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 1:14 am

dstblj52 wrote:
ordbosewr wrote:
N717TW wrote:

That is an understatement. The recovery of business travel will be very slow given how comfortable everyone has become with online meetings. Budgets won't open up right away and there will be a push to use distance technology to prevent travel well past the the end of the pandemic lockdowns.


My company is not making anything required for travel until there is a vaccine. I have been told 'off the record' that they will not even require many of us to go into an office until that time as well. It was explained that it is all about risk and liability (lawyers). The thinking that my company does not want to be sued if they tell an employee (non-essential) to go into an office or travel and a bad outcome happens.
That does not mean people won't travel, but you have to agree to accept the risk and say the company is not requiring you to do it.....

I have said this numerous times before, the majority of business travel is not coming back any soon.

Notice, I am not even getting into the technology and change in ways of working that this is forcing, that will be a part of the reduction, but IMHO it is not what is driving the delay in the rebound.

I have always thought of business travel as a tragedy of the commons situation you have to meet the customer in person because if you don't those who will end up winning the business


I actually agree with you but I've seen this play before (post dot-com, 9/11 and great recession): "let's try to avoid travel and use technology if we can" if the mantra until there is a deal/client lost where the missing Book of Business stings...then all of a sudden the T&E budget comes back. I went from no Christmas party in 08/09 to flying clients to broadway shows by 2012. What happened? Fortune 500 client left!

Also as a lawyer, I have been advising clients to follow CDC and state advice and don't require employees to visit offices or other lcoations unless they affirmatively volunteer and then then reaffirm that they are under no requirement to put themselves in a situation that they consider risky or dangerous to their own health or the health of their family. The only business clients I have that are traveling right now are highly skilled technical employees who need to install/fix critical equipment.
 
FluidFlow
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Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 6:37 am

N717TW wrote:
dstblj52 wrote:
ordbosewr wrote:

My company is not making anything required for travel until there is a vaccine. I have been told 'off the record' that they will not even require many of us to go into an office until that time as well. It was explained that it is all about risk and liability (lawyers). The thinking that my company does not want to be sued if they tell an employee (non-essential) to go into an office or travel and a bad outcome happens.
That does not mean people won't travel, but you have to agree to accept the risk and say the company is not requiring you to do it.....

I have said this numerous times before, the majority of business travel is not coming back any soon.

Notice, I am not even getting into the technology and change in ways of working that this is forcing, that will be a part of the reduction, but IMHO it is not what is driving the delay in the rebound.

I have always thought of business travel as a tragedy of the commons situation you have to meet the customer in person because if you don't those who will end up winning the business


I actually agree with you but I've seen this play before (post dot-com, 9/11 and great recession): "let's try to avoid travel and use technology if we can" if the mantra until there is a deal/client lost where the missing Book of Business stings...then all of a sudden the T&E budget comes back. I went from no Christmas party in 08/09 to flying clients to broadway shows by 2012. What happened? Fortune 500 client left!

Also as a lawyer, I have been advising clients to follow CDC and state advice and don't require employees to visit offices or other lcoations unless they affirmatively volunteer and then then reaffirm that they are under no requirement to put themselves in a situation that they consider risky or dangerous to their own health or the health of their family. The only business clients I have that are traveling right now are highly skilled technical employees who need to install/fix critical equipment.


The thing is though, this is only one part of business travel. There is also internal business travel and that is probably gonna be gone for a long time.

For example I had to travel a minimum of 5x to Berlin a year, for the four quarterly results and the big yearly report. I told my boss every year that it was not needed and I could have submitted my comments per mail and commented over video. I was there for a whole day and two nights just to talk 15min. But it was mandated that everyone was there because it was the thing we always did. Yeah that is changed now and it was decided that the quarterly meetings are gone and they are gone forever. The yearly is still scheduled.

So that is a reduction of travel of 80% for me to Berlin. Other travels to our other offices are also gone. Yes certain client meetings will come back and I already had 3 that were deemed absolutely necessary but all the internal corporate travel is gone to a bare minimum. That is a reduction of around 95% right now. Together with client meetings we are down around 80-85% and I estimate that we will go back to a maximum of 40% of what was pre Covid.

All the investments in technology that were done in the last 3 months will only have a ROI if we reduce the travel budget by more than 50% over the next 5 years. And this will be done, the board already agreed to it.
 
Westerwaelder
Posts: 240
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Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 12:05 pm

United1 wrote:
Westerwaelder wrote:
tphuang wrote:

They've certainly done a better job of preserving cash than any of other big 4.

It's quite interesting UA is project/planning for 50% pre-COVID revenue until end of 2021. That is a lot less than what I have been thinking.

How do you get to cash positive if your revenue is down 50%? The only way to go is basically minimal capex and dramatic cut in payroll (think 35 to 40%). I don't see how this can be avoided.


I agree, this is a stark message. Alongside the 100+ widebodies in 2023, down from ~200 now.

Maybe this can convince those prophets of a quick recovery here that keep posting TSA figures to bolster their claim that recovery will be quick and is already on the way, business travel will be back to normal soon and other such claims.


UA didn't say anything about retiring widebodies or that the widebody fleet would be down:

A fair use extract from seeking alpha:

https://seekingalpha.com/article/435994 ... art=single

"Operator

From Wolfe Research we have Hunter Keay. Please go ahead.

Hunter Keay

Hi, everybody. Good morning, thank you. So you had 196 wide-bodies at year-end '19. Knowing what we know now, which admittedly isn't much, do you think you have more or less than 100 in the fleet at the end of 2023?

Andrew Nocella

I guess I'll take that. Scott described how this is going to come back. And by the way, I think our international gateways are going to comeback quicker. And I think our international gateways naturally have a lot of place that other gateways don't have, which you see in our numbers, so the answer is more.

Hunter Keay

More than 100. Okay. Got it. And then, thank you."

The only thing UA said about the fleet was the PW powered 752s would probably not be coming back but even those could be reactivated if demand increases quickly enough to justify it. UA plans on keeping it's entire fleet intact until demand becomes a bit clearer....that gives UA options to respond quickly to opportunities if they come up and lower their maintenance cost by lowering utilization. People are reading way to much into a question an analyst posed.

Don't get me wrong it would not surprise me to see some of the older 772s never come back from the desert but that is not what UA said.


Apologies for the confusion around the 100 widebodies.
 
Westerwaelder
Posts: 240
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Re: United Airlines post Q2 2020 Earnings

Fri Jul 24, 2020 12:10 pm

N717TW wrote:
dstblj52 wrote:
ordbosewr wrote:

My company is not making anything required for travel until there is a vaccine. I have been told 'off the record' that they will not even require many of us to go into an office until that time as well. It was explained that it is all about risk and liability (lawyers). The thinking that my company does not want to be sued if they tell an employee (non-essential) to go into an office or travel and a bad outcome happens.
That does not mean people won't travel, but you have to agree to accept the risk and say the company is not requiring you to do it.....

I have said this numerous times before, the majority of business travel is not coming back any soon.

Notice, I am not even getting into the technology and change in ways of working that this is forcing, that will be a part of the reduction, but IMHO it is not what is driving the delay in the rebound.

I have always thought of business travel as a tragedy of the commons situation you have to meet the customer in person because if you don't those who will end up winning the business


I actually agree with you but I've seen this play before (post dot-com, 9/11 and great recession): "let's try to avoid travel and use technology if we can" if the mantra until there is a deal/client lost where the missing Book of Business stings...then all of a sudden the T&E budget comes back. I went from no Christmas party in 08/09 to flying clients to broadway shows by 2012. What happened? Fortune 500 client left!

Also as a lawyer, I have been advising clients to follow CDC and state advice and don't require employees to visit offices or other lcoations unless they affirmatively volunteer and then then reaffirm that they are under no requirement to put themselves in a situation that they consider risky or dangerous to their own health or the health of their family. The only business clients I have that are traveling right now are highly skilled technical employees who need to install/fix critical equipment.


Only we didn't have the same level of technology as we have today - not in 2008 and certainly not in 2001. The tools available are now are reliable and seamless, no comparison to a decade ago. In addition, there has never been such a lengthy enforced break from business as usual. Apparently it takes 66 days for a habit to form.

I am not disputing business travel will come back. But for those peddling the idea of a full bounce back "because it always has", times have changed and it seems airlines have an understanding that it won't.

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