triplefives

I believe Cathay and Singapore have reported a similar drop in this metric as well. Haven't studied this closely enough but shouldn't this be tied in with the price of oil? I would assume net profit is a much better indicator of the health of an airline/industry.

ryman554

Ignoring the size for a second.. there are investors who would argue that buybacks are superior to dividend payments due to the preferential tax treatment. Regardless, the net effect to the investor on the stock value (should) be the same.

I tell you what, if they can buyback the *entire* company, then its a lovely use of cash. Anything to get out of quarterly profit focus is a good thing. I do not believe they will ever buy their company back.

That being said, I agree with you, I would expect there to be a good use of at least some part of that 2B for additional capex.

Longboater

I would attribute competition from ULCC/LCC is becoming a problem. DL is partially shielded from this due to relative lack of competition. (I'm sure DL is still sending Thank You notes to WN for buying up AirTran.) DL is very aggressive in scaring off any attempts of LCC/ULCC in encroaching on their natural territory of SLC/MSP/DTW/ATL. Likewise, UAL is has successful in fending off competition at IAD. (This is a secondary reason why UAL will never abandon IAD.)

I will say I am very pleased to see how UAL did last quarter. Obviously there is a different standard between UAL and DL. While DL is doing extremely well, their profit increased by $100 million year over year, they have a significantly higher standard than all other US carriers. Hence, they were disappointed with those results and are planning on taking steps to return to positive PRASM. I will be interested to hear what UAL/AA are planning on doing with UK traffic with Brexit. Overall, UAL is headed in the right direction and I look forward to listening to Oscar's quarterly results tomorrow. In comparison to $mi$ek, he really sounds like a guy who "gets it" and tries to improve the revenue side, which requires spending money, rather than listening to closed minded Wall Street analysts who insist cutting costs will guide UAL to consistency.

sinoflyer

I actually don't dispute that Smisek had initiated the out-and-back and Polaris plans. That's a part of what CEOs are supposed to do.

But another part of the CEO's job is to execute the plans that they put in place, and Smisek didn't execute in this case. He had planned to begin out-and-back in January; Munoz started it right away in October. I don't know what compelled Munoz to think that UA could begin out-and-back in October while Smisek thought UA could wait until January, but Munoz did it. His other choice was to stick with Smisek's schedule, which he didn't. Was Munoz merely benefitting from the work that was already done for him, or did he chart a new direction for UA with his decisive action? I've said many times pre-September 2015 that UA had a lack-of-vision problem, so I'm skeptical that Smisek could have led UA to the results that we're seeing now. But really, regardless of who should get the credit, I'm happy to see that UA is heading in the right direction.

cerealmarketer

To keep the facts straight. Oscar said "this winter" for the out and back, which was the on time improvement plan agreed to during the summer.

https://www.united.com/CMS/Documents...OscarMunoz.pdf

You can't walk in the door end of September and have the schedules changed wholesale for November with the flip of a switch. There's a lead time on things when you execute.

Oscar's impact to date is on tone, morale, and shorter lead time things. The coffee was a 'quick' win and that took 9 months.

His real assessment will come in 2017 and 2018.

rmadisonwi

Agreed. To change scheduling to out-and-back requires retiming flights so that they align with the arrival of a plane from the same hub. Either that, or a significant increase in fleet spare requirements to allow for longer time on the ground at outstations to line up with the next departure. Neither of those happened in the few weeks between Oscar's arrival and the October implementation that people are supposedly crediting to him.

The mess that would result from changing everyone's schedules just a few weeks before departure would have cost far more than the delays associated with the old schedule, and you'd definitely have heard lots of griping on here as people's 10:00 flights became 11:00 flights, and their connection which was supposed to depart at 11:00 now departs at 10:00 and the connection is broken, and all that fun stuff.

I know it kills people to accept it, but Oscar didn't wave a magic wand the day he got here. Some improvements were actually started under Smisek, even if they didn't get to the point of implementation before he left.

riphamilton

anyone have more color on what hunter mentioned? apparently there was some sort of internal memo issued to employees within the past 24 hours that a long-range analysis of routes/hubs will be undertaken.

EWR764

I jumped on the call late and was in and out, but here are some notes I picked up on the Q&A:

- UAL has not been paying out on its corporate performance guarantee because it is meeting its reliability commitments
- Local share in hubs is rebounding to levels seen pre-integration
- SFO-TLV doing "exceptionally well", new Asia flights "meeting and exceeding expectations"
- Opportunity to start SFO-PVG #2 in October (at long last)
- 3Q outlook has deteriorated, can't forecast flat-to-positive PRASM, initiatives are "focused on profitability"
- Rolling out new revenue management software "Gemini" in 4Q, good results in testing thus far
- Corporate bookings flat, revenues forecast down 3%

Kacee

This sounds ominous on multiple fronts. Beware the UA IT "upgrade."

EWR764

If nothing else, a convenient excuse to explain away less favorable PRASM performance!

cerealmarketer

When they had an investor call in June they said they were planning a deep dive into the hub positions this year, which would in theory be ready for the next investor meeting late this year.

Maybe that's what the memo referred to.

Despite the 3Q revenue outlook, stock up vs peers today.

The local share in hubs comment sounds interesting.

Also I didn't listen but apparently still no senior management change announcements.

halls120

Smisek's team was also responsible for the miserable three years following the merger, so giving them credit for fixing part of what they broke isn't something I'd be drawing attention to.

Again, most of his "improvements" were actually fixing something he broke.

minnyfly

Sounds good if you're an investor. A better system would be the most impactful item under their control to increase revenue. Airline revenue management is very difficult.

cesco.g

Way to look at it!

Glad to hear that SFO-TLV turned out to be a successful move!

Outlook for Q3 (and Q4) certainly not easier due to recent events in France, Turkey. Currently seeing moderate loads TATL Eastbound, but full flights TATL Westbound form parts of Europe, where school vacation began.

channa

Fair enough. Though it doesn't change the fact that Smisek having a revelation 3 years after he broke something that he should fix it is still bad management.