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UAL 1Q 2013 call/results - Thursday 4/25/13

UAL 1Q 2013 call/results - Thursday 4/25/13

Old Apr 18, 13, 10:46 am
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UAL 1Q 2013 call/results - Thursday 4/25/13

Just announced:

United Airlines (UAL) will hold a conference call to discuss first-quarter 2013 financial results on Thursday, April 25, 2013, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com.

For those who are interested, the call (and the questions that are asked and their tone) gives a very good window into where UA is going and how much pressure management is getting.

I expect this call to be particularly interesting. Loss for the quarter (and revenue figures, so we can all quit speculating... ) will also be released.
__________________________________________________ __________________

P.S. (taking from their press release) AA just reported a net profit of $8 million (excluding $349 million in reorganization costs and special items.) In the same period a year earlier, AA lost $248 million. Including items.Revenue rose 1% to $6.1 billion, on 1.3% less capacity.

During the quarter, consolidated passenger revenue per available seat mile grew 2.6%. Domestic PRASM rose 2.7%, "with particular strength in Los Angeles and Chicago." International PRASM grew 2.6%. In Latin America, PRASM was "robust" and the company said "targeted growth in the region will be accretive to earnings."

That their strongest growth was at LA and ORD, the two places they compete head to head with UAL, says a lot.

Last edited by spin88; Apr 18, 13 at 11:00 am Reason: adding p.s.
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Old Apr 18, 13, 9:45 pm
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Thanks for the heads up^
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Old Apr 18, 13, 11:16 pm
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I guess another opportunity to blame the loss on "costs" while ignoring the migration of business customers, then gleefully announce more product and service cuts, since gutting a service product always restores the organization to profitability
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Old Apr 19, 13, 7:14 am
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Originally Posted by bocastephen View Post
I guess another opportunity to blame the loss on "costs" while ignoring the migration of business customers, then gleefully announce more product and service cuts, since gutting a service product always restores the organization to profitability
Quite the contrast to AA it now seems like - their food costs were up ~11% YOY reflecting an increased investment in their offering. It shows ^
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Old Apr 19, 13, 1:37 pm
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The analysts' predictions for UA's Q1 loss vary quite a bit, but the mean of the estimates is $1.07/sh, which would mean a net loss (before special items) of slightly more than $350 million.

http://finance.yahoo.com/q/ae?s=UAL

http://m.yahoo.com/w/legobpengine/fi...us&.lang=en-us

http://www.nbcnews.com/id/51396284/n...ited-airlines/
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Old Apr 19, 13, 2:30 pm
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Wow, those EPS trends over the past 90 days aren't so hot.
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Old Apr 19, 13, 2:33 pm
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Originally Posted by FWAAA View Post
The analysts' predictions for UA's Q1 loss vary quite a bit, but the mean of the estimates is $1.07/sh, which would mean a net loss (before special items) of slightly more than $350 million.

http://finance.yahoo.com/q/ae?s=UAL

http://m.yahoo.com/w/legobpengine/fi...us&.lang=en-us

http://www.nbcnews.com/id/51396284/n...ited-airlines/
For the year, they had a small profit before special items, then a loss after including $1.3b in special items.

If we're expecting a loss *before* special items, doesn't that mean things have deteriorated?
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Old Apr 19, 13, 3:43 pm
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Originally Posted by UA-NYC View Post
Wow, those EPS trends over the past 90 days aren't so hot.
What I find quite interesting is that the Q1 estimates have dropped from $-0.54 to $-1.09 over the last 90 days, while the full year 2013 estimates have gone from $1.92 to $1.99. Without digging into individual models I'm not sure how they are justifying this. I was going to guess oil prices, but that doesn't really fit because Delta estimates for Q1 and 2013 have basically been flat over the last 90 days.
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Old Apr 19, 13, 3:46 pm
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Originally Posted by mitchmu View Post
For the year, they had a small profit before special items, then a loss after including $1.3b in special items.

If we're expecting a loss *before* special items, doesn't that mean things have deteriorated?
No, each quarter is different. Airlines traditionally lose money in 1Q, are more profitable in 2Q, 3Q is the best quarter, and results in 4Q determine how the year will be.

Note that AA had not made money in 1Q in 6 years. Like with M/M numbers, you have to compare quarter to quarter, and here, as we have discussed earlier, the "comp" 1Q 2012 quarter is very soft.

______________________________________

And btb I've looked for food costs in UA's 2012 10K, don't see where they break out food costs. (which would be interesting to see) anyone know if UA has ever broken them out?

Mich, if you look at page 151 it gives a breakdown of the "special charges" most of which are not for things like lump some (contract signing) labor cost or retirements/dependencies (which are each separately accounted for) but rather a large - and ongoing - undefined item for "other" costs. Check that number for 1Q 2013, if it continues to be large, expect some real hard questions on the call about it. There have already been murmurs on the calls about the large ongoing merger related special charges.

Finally, for those wondering about UAL's higher costs? The item with the highest growth (19.8%) for sUA is for "other" costs. UA described what those costs were for sUA:

"An increase of $561 million, or 19.8%, in other operating expenses in 2012 as compared to the year-ago period primarily due to the cost of fuel
sales to Continental that are eliminated upon consolidation of the Company’s financial results, additional trip interruption costs, hotel and per diem
expenses, personnel-related expenses and additional denied boarding costs
"


What were the sources of sCO's extra "other" costs?:

"Other operating expenses increased by $113 million, or 5.5%, in 2012 primarily due to aircraft redeployment as a result of the Merger and
additional trip interruption costs, hotel and per diem expenses, personnel-related expenses, and additional denied boarding costs."

very interesting to me, and will be intresting to see what items are mentioned re "other" costs in 1Q 2013.

Last edited by spin88; Apr 19, 13 at 3:55 pm
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Old Apr 23, 13, 8:59 pm
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Before this thursday's call, I thought I would post on DL's numbers...

As folks have noticed DL's stock was up by over 10% today, and they had a great great quarter.

P/L: 1Q 2013 net profit (ex-special items) was $85M, GAPP was $7M. That is an improvement (ex-special items) from the ($39M) loss in 1Q 2012.

They did this on a fall in capacity of (2.5%) and traffic of (.6%). Yet they had $7.33B in passenger revenue, with a yeild up +2.1% (to 17.02 c/mi) and PRASM up +4.1% (to 13.83 c/mi)

Total revenue was $8.5B, with $650M in capital expenditure (investment) and 1B in net cash (GAPP).

Its hard to overstate how good these numbers are, they are attracting customers who will pay more, are investing more, and are generating free cash, and a profit. Nothing bad here.

DL also projected its 2Q capacity will be "flat to +1%" with its DOMESTIC flying being up "+1-2%" Delta also substantially increased its mainline flying this quarter while cutting RJs. ^^^

DL is in the middle of a very rapid shift into a new business model with extensive and rapid investment in retrofitting its planes and replacing RJ capacity with mainline.
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Old Apr 23, 13, 9:01 pm
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Originally Posted by spin88 View Post
... they are attracting customers who will pay more...
I wonder where they are coming from.
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Old Apr 23, 13, 9:27 pm
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Interesting article on Bloomberg noting both Delta and USair having strong 1Qs. Also notes American made a profit before charges. Delta was first 1Q profit since 2000! Article notes effects of capacity cuts and discipline and notes UNited Continental expected to be only loss. IMO folks aren't making connection of capacity cuts + long time UA fliers that have had enough and going to competition giving them all a nice 1Q boost.

http://www.bloomberg.com/news/2013-0...-fly-full.html

Last edited by mike1968; Apr 23, 13 at 9:32 pm
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Old Apr 23, 13, 9:27 pm
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Interesting comments from the DL call...

Anderson: "Delta runs the best all-around customer service operation in the global industry by a wide margin. We have been doing so for 2 years, and we will continue to do so because it is an important strategic advantage."

Anderson: "You should expect that we will continue gaining operating strength as we further improve the customer experience, go through a massive up-gauge of our domestic fleet, deploy a variety of new technologies and operate our Pacific franchise with full lie-flat seats in business class this summer."

Bastain: "Our revenue outperformance was driven in large part by corporate revenues which increased 6% from the prior year, and we continue to grow our corporate revenue share.

Breaking revenue out by region, we had solid performance in our domestic markets, with unit revenues up 2.9% on a 1-point decrease in capacity. New York performed well"

Bastain (and explaining a weakness for DL with its high Japanese exposure): "The total impact of the yen devaluation on the quarter, both the exchange rate impact and demand driven, was about 1 point against system RASM. And as the yen has continued to devalue into April, we are looking at an overall system impact of up to 2 points for April"

CFO "Due to the factors mentioned earlier [sequester, Japanese yen, lingering issues with their yeild management system], we expect unit revenues to be down 2% to 3% with the softness largely in the domestic and Japanese entities and then expect unit revenues to show modest year-over-year improvement in May and in June. And while our expectations per unit revenue performance are flat for the June quarter"

CFO: "We will begin taking delivery of 8 to 10 aircraft per month starting in September, which will allow us to retire nearly 40 older mainline aircraft, primarily 757s and the remaining DC-9s and over a 50-seat regional -- over 40 50-seat regional jets by the end of the year. These retirements will produce meaningful maintenance and fuel savings later this year. "

About impact of consolidation: " you still have airlines looking to figure out what they're new combined network strategy is. And I think that's all frictional cost as we move through the actual consolidations, not the announcements of the consolidations but actually getting through the consolidations. And if you think about, for example, since we sit here in Atlanta and we look out at what air trend does a lot, that consolidation is taking a lot of time, and they're doing it very slowly and deliberately. But the big benefits that we see are still probably in the pipeline for us on that. And similarly, with American and US Air, that's another year, 1.5 years away. And lastly, United, still trying to get their act together after a very difficult merger." [Who do you think the first comment is directed at. ]

Anderson: "The savings really start to accelerate the latter part of the year as we start to take in the 717s and exit the 50-seaters in a much more accelerated fashion"

The approach and strategy is almost 180 degrees the opposite of UALs.... Note that DL noted particular strength in NYC, while AA noted strength in LAX and ORD. Notably all places where they compete with UAL... coincidence?
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Old Apr 23, 13, 9:37 pm
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Originally Posted by spin88 View Post
Anderson: "Delta runs the best all-around customer service operation in the global industry by a wide margin. We have been doing so for 2 years, and we will continue to do so because it is an important strategic advantage."
If I don't do the kayaking strategy and decide to try for status again, I'm 90% sure that I'd go with DL at this point.

And, that's the reason. Customer service.
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Old Apr 23, 13, 9:39 pm
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Originally Posted by spin88 View Post
The approach and strategy is almost 180 degrees the opposite of UALs
Don't you mean about 24 months ahead of UA's? Not saying UA are doing a spectacular job these days but to ignore this fact indicates a fundamental lack of understanding of the operational integration required in a merger of this scale

Not doubting your financial acumen at all but this seems like a real anomaly in your analysis.
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