Jun 21, 2016, 9:45 am
Last edit by: sbm12
06/21/2016 Investor Call Presentation
Alternate link to presentation if the ir.united.com site continues to act wonky.
Alternate link to presentation if the ir.united.com site continues to act wonky.
United Airlines Outlines Value-Driving Initiatives
Expected to drive $3.1 billion in incremental value by 2018;
$300 million earnings benefit anticipated from continued reliability improvement
Updates second quarter passenger revenue guidance
CHICAGO, June 21, 2016 /PRNewswire/ -- As United Airlines continues its efforts to create the world's greatest airline, the company is hosting a call for investors today to provide an update on initiatives the company is implementing to improve its financial performance. Additionally, United will share its current network and commercial objectives. The company also now expects second-quarter 2016 consolidated passenger unit revenue to decline 6.5 to 7.5 percent compared to the second quarter of 2015, a change from its earlier expectations of down 6.5 to 8.5 percent.
"We continue to accelerate our business performance while making strides in earning back the trust of our employees and customers," said Oscar Munoz, president and CEO of United Airlines. "With the renewed engagement of our 86,000 aviation professionals, a great global network, a highly flexible fleet plan and a healthy balance sheet – all of the building blocks are in place for United to unlock its full potential."
Value-Driving Initiatives
The company will update investors on initiatives currently underway that are expected to drive more than $3 billion in incremental value to United by 2018 through a combination of cost savings and increased revenue. These initiatives include:
• Commercial Enhancements: Improvements across the commercial organization will drive approximately $1.5 billion of value through increased customer segmentation, updates to its MileagePlus program and modifications to its revenue management system.
• Cost Structure Improvements: Upgauging aircraft and installing slimline seats, combined with continued sensible cost management, will drive approximately $1.3 billion of benefit.
• Strong Operational Performance: The company expects approximately $300 million of value from running a more reliable airline. This operational improvement will grow United's share of premium customers, reduce costs associated with delays and cancellations, decrease the number of passengers re-accommodated on other airlines and improve schedule utility.
Sustained Improvements
Since the beginning of the year, United has achieved significant improvements in its on-time arrival performance, finishing first or second among industry peers all year. United has achieved top-tier performance in baggage handling for 19 of the last 24 months.
As United continues its focus on elevating the customer experience, it recently announced the all-new United Polaris business class, free snacks and transformed airport clubs. And on July 1, United will introduce illy premium coffee on board all flights. Additionally, the company is expanding its industry-leading route network with new service to several destinations across Europe and Asia, including its new flight between San Francisco and Singapore.
For employees, the company has delivered new contracts for the pilots, IAM-represented employees and dispatchers this year and new and improved tools. These and other enhancements are delivering improved service to United's customers, with the company achieving record-high customer satisfaction scores in three of the last four months.
Webcast Information
The investor call will begin today at 9:00 a.m. CT. A live, listen-only webcast of the presentation and question and answer session will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for a limited time.
Expected to drive $3.1 billion in incremental value by 2018;
$300 million earnings benefit anticipated from continued reliability improvement
Updates second quarter passenger revenue guidance
CHICAGO, June 21, 2016 /PRNewswire/ -- As United Airlines continues its efforts to create the world's greatest airline, the company is hosting a call for investors today to provide an update on initiatives the company is implementing to improve its financial performance. Additionally, United will share its current network and commercial objectives. The company also now expects second-quarter 2016 consolidated passenger unit revenue to decline 6.5 to 7.5 percent compared to the second quarter of 2015, a change from its earlier expectations of down 6.5 to 8.5 percent.
"We continue to accelerate our business performance while making strides in earning back the trust of our employees and customers," said Oscar Munoz, president and CEO of United Airlines. "With the renewed engagement of our 86,000 aviation professionals, a great global network, a highly flexible fleet plan and a healthy balance sheet – all of the building blocks are in place for United to unlock its full potential."
Value-Driving Initiatives
The company will update investors on initiatives currently underway that are expected to drive more than $3 billion in incremental value to United by 2018 through a combination of cost savings and increased revenue. These initiatives include:
• Commercial Enhancements: Improvements across the commercial organization will drive approximately $1.5 billion of value through increased customer segmentation, updates to its MileagePlus program and modifications to its revenue management system.
• Cost Structure Improvements: Upgauging aircraft and installing slimline seats, combined with continued sensible cost management, will drive approximately $1.3 billion of benefit.
• Strong Operational Performance: The company expects approximately $300 million of value from running a more reliable airline. This operational improvement will grow United's share of premium customers, reduce costs associated with delays and cancellations, decrease the number of passengers re-accommodated on other airlines and improve schedule utility.
Sustained Improvements
Since the beginning of the year, United has achieved significant improvements in its on-time arrival performance, finishing first or second among industry peers all year. United has achieved top-tier performance in baggage handling for 19 of the last 24 months.
As United continues its focus on elevating the customer experience, it recently announced the all-new United Polaris business class, free snacks and transformed airport clubs. And on July 1, United will introduce illy premium coffee on board all flights. Additionally, the company is expanding its industry-leading route network with new service to several destinations across Europe and Asia, including its new flight between San Francisco and Singapore.
For employees, the company has delivered new contracts for the pilots, IAM-represented employees and dispatchers this year and new and improved tools. These and other enhancements are delivering improved service to United's customers, with the company achieving record-high customer satisfaction scores in three of the last four months.
Webcast Information
The investor call will begin today at 9:00 a.m. CT. A live, listen-only webcast of the presentation and question and answer session will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for a limited time.
United "earnings initiatives" call - 21 June 2016
Jun 21, 2016, 7:29 am
#16
Join Date: Jun 2003
Location: Philadelphia, PA USA
Programs: CO Silver, HHonors Gold, Marriott Silver
Posts: 982
Going on in about 40min ... here is the PDF's from the presentation:
http://ir.united.com/~/media/Files/U...esentation.pdf
Here is where you can listen to the call:
http://services.choruscall.com/links/ual160621sdh72y17
http://ir.united.com/~/media/Files/U...esentation.pdf
Here is where you can listen to the call:
http://services.choruscall.com/links/ual160621sdh72y17
- Rebook fewer passengers on other airlines as a better operation creates fewer passenger disruptions
- Reduce operational buffers (e.g. spare aircraft,
additional ground time, etc.)
Not sure how they're going to achieve both of those items at the same time.
Jun 21, 2016, 8:01 am
#17
FlyerTalk Evangelist
Join Date: Oct 2006
Location: SFO/SJC
Programs: UA Silver, Marriott Gold, Hilton Gold
Posts: 14,899
There are some interesting bullet points in those slides.
Not sure how they're going to achieve both of those items at the same time.
- Rebook fewer passengers on other airlines as a better operation creates fewer passenger disruptions
- Reduce operational buffers (e.g. spare aircraft,
additional ground time, etc.)
Not sure how they're going to achieve both of those items at the same time.
I'm not sure how they think they can reduce ground time. Here at CVG, which is an all-UAX operation and the moment, I rarely see any aircraft with more than 30 minutes of ground time, once in a while it's 35. Even on a CR7, there's not much room to reduce that - already, pretty much everything has to go right for the plane to turn on time. And while at the hubs, I do sometimes note a 2 hour break between the inbound and departure of the plane I'm on. However, in those cases, maybe ~ half the time there is what I would call that longer ground time (say, over an hour),I see that swap in the hours, or even hour, before the flight to an aircraft that's arriving after our scheduled departure time. This just happened to me at IAD on Friday...40 minutes before departure, get a delay notice (delayed due to late arriving crew), then notice a plane swap (our went to BUF instead....to add insult to injury), change of reason to delayed inbound aircraft, and that is arriving 10 minutes after our departure time. Then somehow took 40 minutes from that arrival until they were ready to start boarding (have no idea why). I know this particular flight was Mesa, but have seen this with mainline over the last couple of years as well - except the new inbound is often arriving 1 hour after our scheduled departure. I know ops is more complicated than it looks, and maybe I've hit bad luck more than others with this, but based on my admittedly anecdotal evidence, if the goal is to make the operation better, they need more spare aircraft, not fewer. Or maybe they don't manage what they do have as well.
Jun 21, 2016, 8:32 am
#18
FlyerTalk Evangelist
Join Date: Jul 1999
Location: ORD/MDW
Programs: BA/AA/AS/B6/WN/ UA/HH/MR and more like 'em but most felicitously & importantly MUCCI
Posts: 19,719
They need more operational buffers, not reduced ones, to keep OTP acceptable, reduce misconnects / rebookings, and support better irrops recovery.
Why do they think they have "lost share of premium customers" in the first place (slide #5)?
This airline's two problems are reliability and service. They can't do anything about bad service culture but they can make tactical moves to improve reliability. Reduced buffers ain't one of them.
Why do they think they have "lost share of premium customers" in the first place (slide #5)?
This airline's two problems are reliability and service. They can't do anything about bad service culture but they can make tactical moves to improve reliability. Reduced buffers ain't one of them.
Jun 21, 2016, 8:43 am
#19
Join Date: Feb 2016
Location: ORD | LGA | 2E
Programs: UA GS 1.6MM UC | AA CK 0.7MM AC | Bonvoy Ambassador | Hyatt Globalist | Hertz PC
Posts: 1,055
Jun 21, 2016, 8:55 am
#20
Join Date: Feb 2009
Location: CLE
Programs: UA 1K MM, DL Plat
Posts: 982
This is all marginally depressing... I mean, I realize that this is an Investor call, and so the topics are relatively predictable.
But, still, it seems to largely boil-down to the sentiment that the solution to the problems of the last 4 years is to double-down on many of the strategies of the last 4 years.
I'm also somewhat amused that they included:
"Migration to single maintenance system reduces complexity"
and
"New tools and technology enabling improved productivity"
... on the same slide. Because they have SUCH a track record in migrations and technology launches going well. I'm not sure how an Investor is supposed to take that one, other than to find out the timeline and short the stock for the subsequent 90 days!!
But, still, it seems to largely boil-down to the sentiment that the solution to the problems of the last 4 years is to double-down on many of the strategies of the last 4 years.
I'm also somewhat amused that they included:
"Migration to single maintenance system reduces complexity"
and
"New tools and technology enabling improved productivity"
... on the same slide. Because they have SUCH a track record in migrations and technology launches going well. I'm not sure how an Investor is supposed to take that one, other than to find out the timeline and short the stock for the subsequent 90 days!!
Jun 21, 2016, 8:57 am
#21
Join Date: May 2005
Programs: Million Miler, 1K - Basically spend a lot of time on planes
Posts: 2,202
This is exactly my scenario. If I need to get there, I almost always book around UA if it has to be a connecting flight. I also book around them when 50 seater is only option.
Jun 21, 2016, 8:58 am
#22
FlyerTalk Evangelist
Join Date: Jul 1999
Location: ORD/MDW
Programs: BA/AA/AS/B6/WN/ UA/HH/MR and more like 'em but most felicitously & importantly MUCCI
Posts: 19,719
I agree this is pretty uninspiring unless you are Hunter Keay. A lot of Oscar's efficiency drive sounds like Project Quality 2.0, but with the gloss of promised better service / motivated workforce.
Jun 21, 2016, 9:26 am
#23
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
Posts: 4,599
Interesting they said the domestic close-in booking softness that they and Delta, AA saw earlier in the quarter seems to have improved.
And Atlantic yields coming in better than expected.
Explains why the stock is up today (keeping 2Q guidance at the high end of what they said earlier). Eases some of the fears of being in / imminent recession.
The rest of what was said wasn't very material other than publicly acknowledging the share shifts with some numbers. And that SFO gained share in the last several years.
I'll bet performance (worst to best in terms of market share change) has been...LAX, IAH, IAD, ORD, EWR, DEN, SFO
Note when they talk about share, they talk about the whole metro, not a single airport.
Though Oscar did say he hates the current online survey system and plans to discard it in favor of something simpler later this summer.
And there might be customers involved in the investor day near the end of the year. Guessing that will be timed around the Polaris launch in early December...which is also the time of year Delta holds its investor day.
And Atlantic yields coming in better than expected.
Explains why the stock is up today (keeping 2Q guidance at the high end of what they said earlier). Eases some of the fears of being in / imminent recession.
The rest of what was said wasn't very material other than publicly acknowledging the share shifts with some numbers. And that SFO gained share in the last several years.
I'll bet performance (worst to best in terms of market share change) has been...LAX, IAH, IAD, ORD, EWR, DEN, SFO
Note when they talk about share, they talk about the whole metro, not a single airport.
Though Oscar did say he hates the current online survey system and plans to discard it in favor of something simpler later this summer.
And there might be customers involved in the investor day near the end of the year. Guessing that will be timed around the Polaris launch in early December...which is also the time of year Delta holds its investor day.
Last edited by cerealmarketer; Jun 21, 2016 at 9:39 am
Jun 21, 2016, 9:58 am
#25
Join Date: Feb 2009
Location: SEA
Programs: UA SP, DL SM MM, AS 75K, SPG Platinum, Hyatt Diamond.
Posts: 2,596
as is DAL and AAL similarly down since the beginning of the year. Best not to look at stocks in isolation of their industry performance.
And before folks start posting specific time periods, I think we have all learned that stock market data can be used to prove most anything.
And before folks start posting specific time periods, I think we have all learned that stock market data can be used to prove most anything.
Also, it's best to look at performance long term. In the one year comparison we find that AA is still down the most at -27.6%, UA at -15.6% and DL at -7.5%.
Taking it further in the 5-year uberblick we see DL at an astonishing gain of 305%, UA at a far less impressive 87% and AA at an anemic gain of 15%.
Parker and Smisek are (were) of very similar minds in "growth" strategy, interesting the value of their companies, have been on similar trajectories.
Jun 21, 2016, 9:58 am
#26
Suspended
Join Date: Feb 2009
Posts: 693
the whole not rebooking on OAL may save a buck on that flight, but it 1) annoys customers and 2) may even cost more in the same transaction.
I took a VDB this past weekend. the flight i really wanted was DL. the GA made some lame excuse "i can't book OAL if there's a connection" never heard that one before (it would have been DL to DL). I actually texted my friend upstairs while I was at the gate to confirm, and he said they absolutely could book DL.
So the offer started at $300, i walked away. They were over by 9 (ended up needing 3). So they upped to $400. For that i said fine i was willing to do UA the next morning. So then they spent $175 putting me in a hotel and $40 in meal vouchers. If they put me on DL that night, i would have gotten to my destination as a happy pax, and they would have saved $315 (hotel + $100 higher VDB offer + food vouchers) (maybe less, they assume some breakage on meal vouchers, but i used it to the last penny including buying an apple for the nice cashier).
Does anyone know the interline rates? The cash rate on the DL flight I wanted was like $300. I assume the interline would be way less. But the point is they annoyed a pax unnecessarily (I think I'm somewhat of a High Value flyer...almost all International paid Business, with a few domestic here and there and approx $40k PQD/yr) and spent all sorts of other money to avoid booking OAL.
The PMUA days had better yields, took higher VDBs, had happier customers who took VDBs and that process seemed to work.
I say go back to $400 flat for every VDB, and rebook on frickin anything the customer wants. You probably sold that last seat at 2-5x the cost of the TCV, so consider it a win/win.
I took a VDB this past weekend. the flight i really wanted was DL. the GA made some lame excuse "i can't book OAL if there's a connection" never heard that one before (it would have been DL to DL). I actually texted my friend upstairs while I was at the gate to confirm, and he said they absolutely could book DL.
So the offer started at $300, i walked away. They were over by 9 (ended up needing 3). So they upped to $400. For that i said fine i was willing to do UA the next morning. So then they spent $175 putting me in a hotel and $40 in meal vouchers. If they put me on DL that night, i would have gotten to my destination as a happy pax, and they would have saved $315 (hotel + $100 higher VDB offer + food vouchers) (maybe less, they assume some breakage on meal vouchers, but i used it to the last penny including buying an apple for the nice cashier).
Does anyone know the interline rates? The cash rate on the DL flight I wanted was like $300. I assume the interline would be way less. But the point is they annoyed a pax unnecessarily (I think I'm somewhat of a High Value flyer...almost all International paid Business, with a few domestic here and there and approx $40k PQD/yr) and spent all sorts of other money to avoid booking OAL.
The PMUA days had better yields, took higher VDBs, had happier customers who took VDBs and that process seemed to work.
I say go back to $400 flat for every VDB, and rebook on frickin anything the customer wants. You probably sold that last seat at 2-5x the cost of the TCV, so consider it a win/win.
Jun 21, 2016, 10:07 am
#27
Join Date: May 2011
Posts: 5,814
http://news.delta.com/delta-and-amer...line-agreement
Jun 21, 2016, 10:27 am
#28
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
Posts: 4,599
I listened and my interpretation is the cost saving is less about changing policy, but about being more reliable so the OAL rebook isn't necessary to begin with.
They've felt more lenient on the OAL front in the last year or so.
They've felt more lenient on the OAL front in the last year or so.
the whole not rebooking on OAL may save a buck on that flight, but it 1) annoys customers and 2) may even cost more in the same transaction.
I took a VDB this past weekend. the flight i really wanted was DL. the GA made some lame excuse "i can't book OAL if there's a connection" never heard that one before (it would have been DL to DL). I actually texted my friend upstairs while I was at the gate to confirm, and he said they absolutely could book DL.
So the offer started at $300, i walked away. They were over by 9 (ended up needing 3). So they upped to $400. For that i said fine i was willing to do UA the next morning. So then they spent $175 putting me in a hotel and $40 in meal vouchers. If they put me on DL that night, i would have gotten to my destination as a happy pax, and they would have saved $315 (hotel + $100 higher VDB offer + food vouchers) (maybe less, they assume some breakage on meal vouchers, but i used it to the last penny including buying an apple for the nice cashier).
Does anyone know the interline rates? The cash rate on the DL flight I wanted was like $300. I assume the interline would be way less. But the point is they annoyed a pax unnecessarily (I think I'm somewhat of a High Value flyer...almost all International paid Business, with a few domestic here and there and approx $40k PQD/yr) and spent all sorts of other money to avoid booking OAL.
The PMUA days had better yields, took higher VDBs, had happier customers who took VDBs and that process seemed to work.
I say go back to $400 flat for every VDB, and rebook on frickin anything the customer wants. You probably sold that last seat at 2-5x the cost of the TCV, so consider it a win/win.
I took a VDB this past weekend. the flight i really wanted was DL. the GA made some lame excuse "i can't book OAL if there's a connection" never heard that one before (it would have been DL to DL). I actually texted my friend upstairs while I was at the gate to confirm, and he said they absolutely could book DL.
So the offer started at $300, i walked away. They were over by 9 (ended up needing 3). So they upped to $400. For that i said fine i was willing to do UA the next morning. So then they spent $175 putting me in a hotel and $40 in meal vouchers. If they put me on DL that night, i would have gotten to my destination as a happy pax, and they would have saved $315 (hotel + $100 higher VDB offer + food vouchers) (maybe less, they assume some breakage on meal vouchers, but i used it to the last penny including buying an apple for the nice cashier).
Does anyone know the interline rates? The cash rate on the DL flight I wanted was like $300. I assume the interline would be way less. But the point is they annoyed a pax unnecessarily (I think I'm somewhat of a High Value flyer...almost all International paid Business, with a few domestic here and there and approx $40k PQD/yr) and spent all sorts of other money to avoid booking OAL.
The PMUA days had better yields, took higher VDBs, had happier customers who took VDBs and that process seemed to work.
I say go back to $400 flat for every VDB, and rebook on frickin anything the customer wants. You probably sold that last seat at 2-5x the cost of the TCV, so consider it a win/win.
Jun 21, 2016, 10:35 am
#30
Suspended
Join Date: Feb 2009
Posts: 693
i mean, at the end of the day, i got a hotel night credit, and extra $100 in TCV, and $40 in meals and didn't have to fly on a red eye, so i was fine with it, but it was just an odd experience