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United CFO Rainey Implies Certain Elites were "Over Entitled".

United CFO Rainey Implies Certain Elites were "Over Entitled".

Old Jun 16, 2013, 10:49 pm
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Originally Posted by DCBob
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
Ok smart person - what would you do if in late December, you observe that you're less than 2000 miles away from either 0P (Platinum) or 1K?

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Old Jun 16, 2013, 11:08 pm
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Originally Posted by UA-NYC
Probably the only route I fly where I still see empty seats.
I've had a rash of empty seats lately. LAX-ORD, empty middle. SFO-LAX, empty middle. DEN-LGA, empty middle and aisle! Seems flights are less full these days.

Originally Posted by DCBob
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
I disagree. I still find incredible value out of 10 confirmable upgrades vs 2, which means I'm hustling for my last 10-15k PQM. Although these days I flight/segment pad instead of flying straight mileage runs.
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Old Jun 16, 2013, 11:29 pm
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I guess it all comes down to how management will justify the financial performance of the comapny to the shareholders. As long as the shareholders are satisfied with the management story, the customers are secondary.

I think many of us still hope for the good old days of flying - we fly so much because we like to and we still want it to be somewhat special. Airline management nowadays is probably more about number crunching and contract management than anything else.
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Old Jun 17, 2013, 12:38 am
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Originally Posted by fly18725
How much should an airline spend to retain a domestic customer?
I'm at a loss to understand your constant mention of domestic customers? I'd be fairly confident to say the preponderance of domestic pax who go out of their way to fly an airline will also fly that airline internationally. Lose one and you lose the other.

Originally Posted by DCBob
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
I'll chime in with disagreement here. It doesn't make sense to MR from *S to Plat but there are certainly reasonable situations (and price points) where an MR would make sense.

Today I was asked what airline I often fly to/from the US, a question I get a fair bit. My response was the same as it's been for the last year: I fly UA but unless you're a savvy flier I'd recommend staying far away from them.

Why do i say this? Because UA feels it's over-entitled to kayakers.
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Old Jun 17, 2013, 1:57 am
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Originally Posted by mitchmu
The entire stock market is at an all-time high. To some extent, UA has risen with the tide that has caused most stocks to rise. We need to look at UA stock performance relative both to the broader market and to it's competitors. Looking merely at the gain in UA stock price against its own price when the economy was worse doesn't tell us anything.

It also appears to be the case that they have made many decisions to increase short term profitability at the potential expense of long term value.
I think you wish to ignore the objective facts.

On August 1, 2012, UAL was trading at 18.17. Last Friday, it closed at 32.67, for a gain in the period of 79%.

Using the same dates, DAL increased 98%; LCC (US Airways) increased 56%; AAMRQ increased 892% (but, since they are in bankruptcy, you can pretty much ignore that one); and LUV (Southwest) increased 51%.

Objectively, United stock is doing very well. You may not like it, but that is the fact.

Short term profitability emphasized? Hello! That's what virtually every company out there is doing. That's how the game is played.

Originally Posted by mitchmu
Investors are seeing the increase in margins and drinking the cool-aid. What they're missing are the long term strategic implications of the short-sighted strategy to make UA more like RyanAir.
Results talk and complaints can take a walk.

I agree with you from a customer standpoint, but you're not going to find anyone telling Smisek he is screwing up when he is showing results like this. Just not going to happen no matter how much you want it to.

Originally Posted by dgcpaphd
Generally, the market value of a stock is influenced by psychological factors rather than financial income or losses of a corporation. This phenomenon likely explains why UA's stock is doing well, at the present time (and in the short run).
But that short term performance is all the market cares about.

In the long run, despite the favorable price increase of the stock, eventually the enormous recent losses will be center most and the misleading statements often made by UA management will reach investors. When the losses and the misleading statements finally connect, the market price of the stock will drop if the losses continue (and they have and they will).

It is easy to confirm (via SEC reports), that UA has experienced enormous losses since the announcement of the demotions to programs and to services.

It is also easy to confirm that UA experienced a large exodus of former customers, as evidenced by a drop in ticket sales and acknowledged, publicly, by Smisek.

The above two events are not reflected in the stock price.
Of course they are. Most of the investors are institutional investors. They are very well aware of the numbers in the SEC filings.

Smisek calls frequent news conferences and is often interviewed by various industry analysts concerning UA's performance. Smisek makes statements during those events that divert the listeners away from facts. He talks about his new shiny airplane and states that passengers that left UA will return, solely to fly on the Dreamliner. He also makes other claims but never focuses on the huge losses racked up by UA since his tenure began.

Apparently, Smisek has a charm that some people like and which stops listeners from checking facts against what he says.

One example of Smiseks charm can be found in last weeks Chicago Tribune article

After reading the article, I am surprised that no one challenged Smisek when he stated to the group Mergers are tough, but were doing well.
That's what CEOs are supposed to do.

Clearly, considering that UA lost more than one and one-half BILLION dollars (just since the announcement of the demotions to programs and services), Smisek's statement is false.UA is not doing well.
With the way earnings and expenses are reported, the market has apparently decided that the 1-1/2 billion is irrelevant, so it therefore is.

The rest of Smisek's speech is filled with diversionary remarks that deflect away from the poor operational and financial results of UA over the past year and one-half.

When the false statements finally collide with UA's reported losses, the chickens will eventually come home to roost at UA and the stock will decline.
You may be right, but as of now, the market does not agree with you. If you start to see if a big sell-off or knowledgeable people shorting the stock, then you might be right. But as we sit here right now, you are just reading tea leaves.

(BTW, I read the leaves the same way. The point I am making is that the market is reading them differently.)
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