...ineffective management that drove VFFs/HVFs away, eroding the price premium the airline used to be able to command?
Interesting how there would be a project increase in share price and market cap (i.e. shareholder value, assuming no buybacks) if management were considered "ineffective."
Any way, ancillary revenue is better than ticket price premium as the CM is higher and is a more stable revenue stream than premium tickets.
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United Continental UAL was downgraded at J.P. Morgan to neutral. Valuation call, based on a $30 price target, J.P. Morgan said.
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Originally Posted by sbm12
That's still a 10%+ premium over the current share price.
Looks like it's based on their original $30 price target from Nov 15, 2012 based on terms in the contract, lack of flexibility in staffing (compared to DL), and profit sharing.
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Originally Posted by gsforfree
Interesting how there would be a project increase in share price and market cap (i.e. shareholder value, assuming no buybacks) if management were considered "ineffective."
Is that going to happen if they keep lagging key competitors in PRASM growth? Cause that's what's happened the past year
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Any way, ancillary revenue is better than ticket price premium as the CM is higher and is a more stable revenue stream than premium tickets.
Sounds like you work for UA! Focus on ancillary revenue (Premier Access, E+ upsells, TODs) over the most valuable flyers yielding most of your profit...that seems to be the crux of their strategy these days
Sounds like you work for UA! Focus on ancillary revenue (Premier Access, E+ upsells, TODs) over the most valuable flyers yielding most of your profit...that seems to be the crux of their strategy these days
Nope - but look at the economics of N. American flying. Businesses are not really paying for premium cabins (domestically). Generally domestic premium product is crap around the board, outside of select high-competition routes. Margins on seat revenue is tight enough without adding in fuel variability and wage escalations.
Therefore, if you could generate cash flow from a high margin product that requires few "touches" from your hourly staff or sell something (E+, for example) that you previously did not, why wouldn't you?
Not to start this argument again, but we actually don't know who are UA's most valuable flyers. Outside of GS, none of the "status" levels attained are linked to either revenue or contribution margin.
Take a 1K customer with, say, 130 PQS last year. If 95% of those flights are on AC and are generating, for exampls, 200K redeemable miles, that customer is actually not valuable to UA at all. He's just generated a liability on the balance sheet, no ancillary revenue b/c of status, and lost revenue opportunities on award changes, SDC, etc.
Take a 1K customer with, say, 130 PQS last year. If 95% of those flights are on AC and are generating, for exampls, 200K redeemable miles, that customer is actually not valuable to UA at all. He's just generated a liability on the balance sheet, no ancillary revenue b/c of status, and lost revenue opportunities on award changes, SDC, etc.
I agree in principle, both that none of us know who the actually valuable customers are and that flying mostly on partners likely means one is less valuable to United. That said, the AC example might not be the best one given the joint venture operations they have with UA on many transborder and TATL flights.
I agree in principle, both that none of us know who the actually valuable customers are and that flying mostly on partners likely means one is less valuable to United. That said, the AC example might not be the best one given the joint venture operations they have with UA on many transborder and TATL flights.
And of course the flip side is that a 1K flyer could have all YBM fare on transcons on UA and be super profitable.
