You're right - my bad. Still, not a lot of improvement over last year.

Doesn't this belong here? http://www.flyertalk.com/forum/unite...pensation.html

dh

Let me give a few examples from June's data:

In June UA's traffic was up .1%, yet UAL actually reduced its capacity by (.3%), so net its load factor went up by .4% PRASM was then (as I've adjusted it) up 4-5% consolidated, and 3-4% mainline.

in June DL's traffic was also up .1%, but there capacity was cut by (1.7%), so load was up by 1.8%. DL's PRASM was up by 8% (my original post was in error in saying 6%).

So there could be a number of things going on (1) DL could be have attracted a few more high value passengers, (2) DL could have kept its same fliers yet charged them a little more, or (3) swapped lower fare passengers for higher fare ones. However simply sheding capacity does not mean that your revenue stays constant, you loose some sales too, so its not constant. regardless DL blew UAL's doors off however you look at it.

United also pushed up its Load, attracted the same number of extra passangers as DL, yet it was able to sell its seats for less, i.e. have less of a yield premium. Had UAL cut capacity more they would have perhaps upped their PRASM, but that assumes they still sell everyone who actually flew them a ticket. Not going to happen either short or long term.

Nor can load factor account for the difference. In May UAL's load factor was down (.1%), i.e. they were less able to fill seats. As noted above UAL's may's PRASM was down (.4%) for mainline. So they lost passengers and revenue in May. American in May was up +.8% in load, yet had a PRASM up 7.3%.

April 2012 (just looking at PRASM) UAL was up 4.5% consolidated, and 3.3% mainline,DL was up 11%, US was up 9%, and AA was up 11.6% These are all big gaps, and as I have noted there is actually a smaller gap this month.

My point is that UAL is doing post 3/3 very poorly. Had they had an attractive proposition for fliers with the capacity cuts at DL and AA one would have expected UAL to pick up business. Did not happen, UAL has been flat on how many fliers they attract (down .1% in may, up .1% in june) yet are not getting the same extra revenue for the seats they sell that their competitors are.

Wait...UA is expanding capacity? Care to share the numbers to support this claim?

This is what I have been saying for months. UA is losing the frequent business traveler. And the numbers are consistently underlining this trend. Business travelers don't want upgrades to be sold out from underneath them to kettles, they don't want to have to babysit reservations daily, and they want the automation the airline has in place to work flawlessly enough so they can have confidence in what they will get in return for their airfare. And contrary to the assertion of a select few on this board, UA has been failing in all these categories, and it is not getting any better.

I personally expect the Q2 numbers on UA's side to be ugly. And while that will not be enough to oust Jeff and his team and to reverse some of the poor decisions that have been made to date, I do think it will move the needle towards both ends incrementally.

my back of an envelope calculation says that they lost about $400M in revenue in Q2 over what it would have been had they matched the competitors in revenue growth. I don't know how much the extra staffing due to SHARES will effect things.

This said, Q2 will be chocked up to "transition costs", merger costs, etc. I think that Q3 will be more telling, and will either prove management's approach to have been correct, or not.

Sure. Consolidated ASMs up .1% means UA had an increase in the metric for this variable. Tiny increase, but compared to a few % point decrease, an increase is an increase.

No offense, but to call that an increase is semantics. It's really flat as far as I am concerned...

this is not correct, you have misread their report. They said:

"UAL's consolidated traffic (revenue passenger miles) in June 2012 increased 0.1 percent and consolidated capacity (available seat miles) decreased 0.3 percent versus June 2011. The company's consolidated load factor in June 2012 increased 0.4 points compared to June 2011."

http://ir.unitedcontinentalholdings....969&highlight=

ASM was DOWN .3% in June.

You are 100% correct. I misread.

Seems to me they gave up yield for load factor, which is usually the opposite. As LF increases, so too does yield (most of the time.) Of course yield is multiplied by LF, so a reduction in one and an increase in the other can net the same end RASM. Perhaps they lowered the bar too much when they could have held out for more. But that is hindight and one can never tell if they had held out for more, if it would have materialized. If it didn't, then they would have lost both the yield and the custmers as well. One cannot backtrack and change the variable to see what would have happened.

I don't think there is a simple trade off like this, nor do I think UA "chose" to give up yield, and such a thing would have been stupid.

Obviously if one has an under-performing route (low overall fares or low load overall) one can slightly increase your PRASM by cutting those. One can also cut the number of flights which will increase the load, sometimes dramatically. However this can also cause operational problems. UA has sometimes had these problems hub to hub where everything is oversold, and I am sure they loose fares at the edges as a result. My point is that cuts in capacity (leading to more load) impacts PRASM, but its not a one to one relationship.

What a good airline does is try to "right size" the airline for the profitable demand they think they can attract, and then try to sell those seats for MORE MONEY. Both UA and DL attracted .1% more passangers (this is in contrast with AS which increased its June 2012 traffic by 10%), both had cuts to capacity (more at Delta, less at UA). One must assume that had either cut capacity further they figured it would not help their overall revenue/cost profile or they would have cut further (cuts in flights only cut marginal costs by part of the % reduction, AC costs, debt, overhead remain the same).

So what can one draw out of all this? Delta, and AA, and US are doing a better job of attracting people who will pay MORE for their tickets than is UA. This "yield premium" is what UA is unable to get post 3/3, and it has been rapidly eroding.

Now keep in mind that this merger was sold to the street as one that due to NETWORK would be attractive to FFers and corporate accounts, and as such would provide a yield premium. So far this is not going as planned.

To be fair...the merger COULD have been an amazing opportunity. Just think what would have been possible if FLIBS and his cohort had taken over the reigns. If UA would operate more like PMUA than PMCO and if management hadn't decided to sell out its customer base, this merger could have crated a really amazing airline. I guess it's still possible, but it will be far more difficult now that they have dug themselves such a deep ditch to climb out of.

I think its still pretty simple. A mia culpa, then telling us they are going to do it much closer to the pmUA way, block the few areas they think Elites were gaming the system, AND THEN, sit back and let the Route Network do the talking. They could have been counting money.

Had they done that from the start, the exodus would have been from DL and AA and not to.

So they have too many Elites. Let the Elites fight for the available E+ seats and UG's. Those that don't make their reservations first to get the E+ seats or have the status of the others to qualify to get UG'd, let them offer us (me) to buy the TOD's to get that occasional F seat.

Commitment and subsequent status has it's privileges. Any battle should be from within the Elite group. Not between the Elites and Kettles.

They still have to get the MX, PNR splitting and musical seat assignment problems fixed before that could work though.

Agreed - go above and beyond for your elites (you know - the group that heavily over-indexes on business travel, your supposed customer target), and steal like pax from other carriers too once they see how good the value proposition was, but overall achieve profitability due to newfound size & scope of airline (increased bargaining power, etc.), while eliminating redundancies in the organization.

Oh what could have been...

I firmly believe, based on extensive experience of large mergers, that we are only starting to reach the end of the highly disruptive transition phase. Business as usual, or anything close to it, hasn't even arrived yet. That's what makes some of these "lamenting" style posts - "Oh what could have been" appear to be somewhere between humourous and naive.

With a transformation project of this scale, you have at least 6 months where you are operating in a "keep the lights on" mode. You have to get all of the basics correct so the company can work together as a whole, address any major issues that prevent you from doing business, and then you can focus on the medium- and long-term strategy. Advertising, branding, new customer acquisition plans, etc. - these are not critical to getting through the first months of a merger.

I have no love for the management or the business itself, so I'm posting this without an agenda. I'd love to hear how you and the previous poster can possibly justify this tone whereby you believe that the merger has been and gone and failed. You're aware that the foundation of the airline was only combined 4 months ago, right? I'd suggest looking at where things are in Spring of next year for a realistic success / failure test.

You think I'm referring to the "integration", but I'm actually referring to business processes & strategic decisions mainly.

"Integration" is mostly complete from the passenger POV (except for that pesky pilot/FA, etc. thing). SHARES still stinks of course, but at least things are directionally better (miles posting, TODs maybe dropping off, call times down, etc.). That doesn't make the airline special - it's a price of entry for continuing to do business.

However, I do think it is "business as usual" when it comes to their business practices - elite levels have been compressed, they're doing their best to dismantle 1K, "loyalty" is valued much less than before, they'll do everything to sell the smallest benefits, etc. That's why many of us laugh at the huge dissonance of $misek et. al saying "we're focusing on business travelers" when most words and actions go contrary to that.

The merger isn't a "failure" - they've merged, mostly successfully. My point remains (as does the poster I was replying to and agreeing with) that they could have truly made it a leading global airline, but their strategy instead appears to make it just a really big one. I think many of us wanted to fly PMUA; we're more now resigned to flying COdbaUA (or slowly/quickly moving away from it).