Jun 4, 2014, 7:33 am
Last edit by: mkr
UAL
earnings released: Thursday, July 24,2014 9:30 am CST/10:30 EST
If you missed the live webcast of the 2nd Q earnings conference call, it is now available for replay for a limited time and will later be archived.
A transcript is now available also.
Click this link for access to replay and transcript of call:
http://www.flyertalk.com/forum/23227909-post151.html
Current 2Q 2014 UAL guidance (4/24/14 investor update):
PRASM +1-3%
ASM "quarter, flat to +1%, full year +.5 to 1.5%"
CASM ex fuel, "quarter +1.25 to 2.25%, full year +1-2%"
Analyst guidance/actual 2Q 2013 results:
6/5/14 estimates:
1.86/share (using the 367M shares from last release $682M profit ex special items) [2q 2013 actual was $521M; $1.35/share ex specials; $469M GAAP]
Revenue 10.33B (3.3% growth) [2q 2013 was $10B]
Actual results:
- $789m GAAP Net income, $2.34/share. 7.6% margin
- $919m Net Income (excluding specials) or $1.04 per share. 8.9% margin
- $906m Operating Income (8.8% margin)
- $1.08B Operating Income excluding specials (10.4% margin)
- PRASM up 3.7%, yield up 3.0%; domestic yield +6.8%
- ASM -0.1%
- CASM-Ex fuel, profit sharing and special items down 0.2%
- Operating Revenue: $10.33B (up 3.3%); Passenger Revenue $8.98B( up3.6%)
- $1.5B in operating cash flow
Links to UA Press Releases / News Articles / etc.:
DAL
earnings released: Wednesday July 23 at 10 edt. Call link: https://event.on24.com/eventRegistra...epage=register
Actual results:
- $801m GAAP Net income, $0.94/diluted share. 7.5% margin
- $889m Net Income (excluding specials) or $1.04 per share. 8.4% margin
Delta's pre-tax income, ex special items was $1.4 billion.
- $1.58B Operating Income (14.9% margin)
- $1.61B Operating Income excluding specials (15.1% margin)
- PRASM up 5.7%, yield up 3.8%; domestic yield +7.4%
- ASM +3.2%
- CASM-Ex fuel, profit sharing and special items was FLAT
- Operating Revenue: $10.62B (up 9%); Passenger Revenue $9.27B ( up9%)
- Over $2.0B in operating cash flow and $1.5B in free cash, net debt $7.9B
3Q projections: Operating margin +15 to +17%, CASM +0 to 2%, "unit revenues" (I take to be PRASM - spin) +2-4% "driven by continued corporate and domestic strength, along with benefits from our revenue initiatives."
Links to DL Press Releases / News Articles / etc.:
http://news.delta.com/2014-07-23-Del...Quarter-Profit
AAL - earnings call: July 24, 2014 at 12:30 cdt
link to call: http://phx.corporate-ir.net/phoenix....estorrelations
Estimates/AAL guidance:
2Q PRASM +5-7% (updated estimate from 6/9/14 traffic release). YTD ASM +2.5%.
Actual results:
- $864m GAAP Net income
- $1.5B Net Income (excluding specials)
- $11.4B Revenue (+10.2%)
- Yeld +6.5% (17.34)
- PRASM up 5.9%, (14.57)
- ASM +3.1%
- CASM +3.9% (13.61)
earnings released: Thursday, July 24,2014 9:30 am CST/10:30 EST
If you missed the live webcast of the 2nd Q earnings conference call, it is now available for replay for a limited time and will later be archived.
A transcript is now available also.
Click this link for access to replay and transcript of call:
http://www.flyertalk.com/forum/23227909-post151.html
Current 2Q 2014 UAL guidance (4/24/14 investor update):
PRASM +1-3%
ASM "quarter, flat to +1%, full year +.5 to 1.5%"
CASM ex fuel, "quarter +1.25 to 2.25%, full year +1-2%"
Analyst guidance/actual 2Q 2013 results:
6/5/14 estimates:
1.86/share (using the 367M shares from last release $682M profit ex special items) [2q 2013 actual was $521M; $1.35/share ex specials; $469M GAAP]
Revenue 10.33B (3.3% growth) [2q 2013 was $10B]
Actual results:
- $789m GAAP Net income, $2.34/share. 7.6% margin
- $919m Net Income (excluding specials) or $1.04 per share. 8.9% margin
- $906m Operating Income (8.8% margin)
- $1.08B Operating Income excluding specials (10.4% margin)
- PRASM up 3.7%, yield up 3.0%; domestic yield +6.8%
- ASM -0.1%
- CASM-Ex fuel, profit sharing and special items down 0.2%
- Operating Revenue: $10.33B (up 3.3%); Passenger Revenue $8.98B( up3.6%)
- $1.5B in operating cash flow
Links to UA Press Releases / News Articles / etc.:
UA Deutsche Bank Presentation PDF
WSJ Article: United Continental: One Sick Bird - related FT thread on WSJ's One Sick Bird article.
May 2014 UA Traffic Reporting Discussion Thread
Q1 2014 Investor Conference Call FT Discussion Thread
United Continental Is Underestimating the Threat From Delta Air Lines @ The Motley Fool - related FT Discussion Thread
United Should Close Dulles Hub, Analyst Says, as He Cuts Rating - FT Discussion Thread
WSJ Article: United Continental: One Sick Bird - related FT thread on WSJ's One Sick Bird article.
May 2014 UA Traffic Reporting Discussion Thread
Q1 2014 Investor Conference Call FT Discussion Thread
United Continental Is Underestimating the Threat From Delta Air Lines @ The Motley Fool - related FT Discussion Thread
United Should Close Dulles Hub, Analyst Says, as He Cuts Rating - FT Discussion Thread
DAL
earnings released: Wednesday July 23 at 10 edt. Call link: https://event.on24.com/eventRegistra...epage=register
Actual results:
- $801m GAAP Net income, $0.94/diluted share. 7.5% margin
- $889m Net Income (excluding specials) or $1.04 per share. 8.4% margin
Delta's pre-tax income, ex special items was $1.4 billion.
- $1.58B Operating Income (14.9% margin)
- $1.61B Operating Income excluding specials (15.1% margin)
- PRASM up 5.7%, yield up 3.8%; domestic yield +7.4%
- ASM +3.2%
- CASM-Ex fuel, profit sharing and special items was FLAT
- Operating Revenue: $10.62B (up 9%); Passenger Revenue $9.27B ( up9%)
- Over $2.0B in operating cash flow and $1.5B in free cash, net debt $7.9B
3Q projections: Operating margin +15 to +17%, CASM +0 to 2%, "unit revenues" (I take to be PRASM - spin) +2-4% "driven by continued corporate and domestic strength, along with benefits from our revenue initiatives."
Links to DL Press Releases / News Articles / etc.:
http://news.delta.com/2014-07-23-Del...Quarter-Profit
AAL - earnings call: July 24, 2014 at 12:30 cdt
link to call: http://phx.corporate-ir.net/phoenix....estorrelations
Estimates/AAL guidance:
2Q PRASM +5-7% (updated estimate from 6/9/14 traffic release). YTD ASM +2.5%.
Actual results:
- $864m GAAP Net income
- $1.5B Net Income (excluding specials)
- $11.4B Revenue (+10.2%)
- Yeld +6.5% (17.34)
- PRASM up 5.9%, (14.57)
- ASM +3.1%
- CASM +3.9% (13.61)
UAL 2Q 2014 Results/Discussion/News → Results Announced July 24th, 2014 ←
Jul 24, 2014, 11:48 am
#271
Ambassador: Alaska Airlines
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As they should. They will have a problem come next year when the sCO 757s will be stretched thin and the 737s will be diverting on winter transcons.
UA pulling a DL and getting used aircraft goes against everything they stand for from an MX perspective. It would likely be much cheaper to take sUA 757 and modify them to their liking rather than buying 30-40 airbus from a 3rd world operator and refresh them. Talk about just sinking money into each frame just to get them up to speed.
UA pulling a DL and getting used aircraft goes against everything they stand for from an MX perspective. It would likely be much cheaper to take sUA 757 and modify them to their liking rather than buying 30-40 airbus from a 3rd world operator and refresh them. Talk about just sinking money into each frame just to get them up to speed.
The CO ones are much newer, but I am sure UA is itching for a solution to replace them at this point, but until someone comes up with a viable 180-200 seater bird to serve the thin markets, UA has to hold onto them.
Jul 24, 2014, 11:50 am
#272
Join Date: Oct 2013
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I didn't see a comment on this yet, may have missed it. While comparisons to competitor performance are important, it may be more important to compare UA's actual's to estimates, given that they're in recovery mode. If I'm reading the results correctly, UA beat estimated EPS by about 18 cents. It seems to me that this is a true success, and they didn't vary so much from estimates that they could be accused of not understanding their business.
It doesn't mean they're making good long-term business decisions, but stringing together a few quarters of slightly beating estimates is going to buy a lot of patience from investors and analysts.
Someone please correct me if I misunderstood the results. I'm admittedly a novice when it comes to financial analysis.
It doesn't mean they're making good long-term business decisions, but stringing together a few quarters of slightly beating estimates is going to buy a lot of patience from investors and analysts.
Someone please correct me if I misunderstood the results. I'm admittedly a novice when it comes to financial analysis.
Jul 24, 2014, 11:53 am
#273
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Jul 24, 2014, 11:56 am
#274
Join Date: Jan 2005
Location: New York, NY
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Posts: 9,453
Delta is retiring a number of 757s and reconfiguring others into a very dense layout. AA is retiring many 757s and replacing with 739ERs and A321s. OTOH, FedEx is buying up almost as many UA 757s that it can (others are coming off lease). It's not as though UA is pursuing a unique strategy here... the domestic 757 is, sadly, yesterday's airplane.
Jul 24, 2014, 12:00 pm
#275
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A few things. The issue with the 757s is its operational efficiency and higher maintenance costs relative to the 737s and 320s. 737s and 320s are still being produced, so parts and skilled labor is plentiful, not so much with the 757s. The fact that the 757s on average costs over $2 million more to operate annually compared to a 739 then multiply that by several years. Plus the 757s are pretty old (some builds were built in 89) so they already have pretty high 'mileage' on them, so it is costlier to maintain. Not to forget, there is a secondary market for the 757s (cargo), so now is the time to make money on those birds. With all of those factors combined, getting a not so old 320/737 on the cheap (probably easily for less than a quarter of the list price for a new bird) and they can still get another 12-15 years on them.
The CO ones are much newer, but I am sure UA is itching for a solution to replace them at this point, but until someone comes up with a viable 180-200 seater bird to serve the thin markets, UA has to hold onto them.
The CO ones are much newer, but I am sure UA is itching for a solution to replace them at this point, but until someone comes up with a viable 180-200 seater bird to serve the thin markets, UA has to hold onto them.
Right but however:
--At least 20 or so sUA 757 were delivered from 1994-1999, making them on average the same age as sCO 757.
--Several of the new PS 757s were delivered in 1989-1990. For what reasons they were refreshed over newer builds I have no idea.
--UA had to pay millions in cutting lease costs early on 757s, which affects the bottom line. This was a special cost a few quarters ago.
--I question the $2 million thing. I don't really trust CO math at this point, especially since we don't exactly know how much the lease rates of the 739 are. I'm guessing they are pretty darn high.
--If they took the DL approach and kept 757s from 1994-1995 and newer, I think this might alleviate their mainline problem. However the managment team got themselves into this mess so they are to blame anyway.
--I SERIOUSLY question how much it would cost to get a batch of used A320 from a mystery airline up to speed. I'm guessing way more than a stored legacy 757.
Jul 24, 2014, 12:03 pm
#276
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Jul 24, 2014, 12:04 pm
#277
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757-200s in the current configuration are not viable in the domestic network, and the 757-222s, with derated PW2037s, no winglets and a less sophisticated avionics suite (referring to the non-ETOPS birds, for transatlantic operations) than the 757-224s were unsurprisingly first on the chopping block. The p.s. fleet are the most economical sUA 752s to hold on to (owned/low-cycle/younger, etc.) but I suspect if UA felt it could pull 15 of the sCO 752s out of current service and dedicate them to p.s., they would have done so and ditched all of the 757-222s.
Delta is retiring a number of 757s and reconfiguring others into a very dense layout. AA is retiring many 757s and replacing with 739ERs and A321s. OTOH, FedEx is buying up almost as many UA 757s that it can (others are coming off lease). It's not as though UA is pursuing a unique strategy here... the domestic 757 is, sadly, yesterday's airplane.
Delta is retiring a number of 757s and reconfiguring others into a very dense layout. AA is retiring many 757s and replacing with 739ERs and A321s. OTOH, FedEx is buying up almost as many UA 757s that it can (others are coming off lease). It's not as though UA is pursuing a unique strategy here... the domestic 757 is, sadly, yesterday's airplane.
sUA has a dozen 757 that are ETOPS. Big mistake in letting these go when they can operate to Hawaii.
Your other points about aviontics (domestic 757s aren't flying to ARN anyways), the PW's (not a valid point), and no winglets is all heresay. See DL.
Also makes me wonder, if the 757 is such a hog what about the 36 73G? Aren't these also grossly inefficient for many routes that they fly?
Jul 24, 2014, 12:04 pm
#278
Ambassador: Alaska Airlines
Join Date: Nov 2008
Location: BWI
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A320- $4-41 million
B738- $15-46 million
B752- $5.5-20 million
So if they sell a 757 and purchase a used 320 with longer shelf life, lower operating cost and lower maintenance costs. They definitely will come out ahead in no more than several years.
Now, it is also much cheaper to operate a bigger plane over 3-4 flights on a 50 seater, so it also does sound like they are considering that option as well for some routes (offer frequencies through one hub and swap several flights for just 1-2 through the other hub).
Jul 24, 2014, 12:14 pm
#279
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It makes absolutely no sense that they're retiring almost all of those 757s, when DL can keep many of similar vintage in service indefinitely. I definitely don't buy the $2 million annual savings BS either. Many of those 757s were owned, so while they have higher operating costs, there's no payments and shiny new 737s need to have a lot of utilization to make up for the payments. And if age is a concern, DL has many 757s that were built in 1984-1985 range that are still in service and are older than the oldest UA example by 4-5 years.
The only thing that interests me is the thought of adding more mainline aircraft from the used market. This strategy has worked quite well for DL, so maybe the CO management team is finally starting to grow a brain.
While this was a great quarter, it's still just a small stay of execution for $mi$ek. He needs to go, and so does the HOU Crew and the mess they've created.
The only thing that interests me is the thought of adding more mainline aircraft from the used market. This strategy has worked quite well for DL, so maybe the CO management team is finally starting to grow a brain.
While this was a great quarter, it's still just a small stay of execution for $mi$ek. He needs to go, and so does the HOU Crew and the mess they've created.
Jul 24, 2014, 12:17 pm
#280
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I didn't see a comment on this yet, may have missed it. While comparisons to competitor performance are important, it may be more important to compare UA's actual's to estimates, given that they're in recovery mode. If I'm reading the results correctly, UA beat estimated EPS by about 18 cents. It seems to me that this is a true success, and they didn't vary so much from estimates that they could be accused of not understanding their business.
It doesn't mean they're making good long-term business decisions, but stringing together a few quarters of slightly beating estimates is going to buy a lot of patience from investors and analysts.
Someone please correct me if I misunderstood the results. I'm admittedly a novice when it comes to financial analysis.
Someone please correct me if I misunderstood the results. I'm admittedly a novice when it comes to financial analysis.
Jul 24, 2014, 12:21 pm
#281
Join Date: Oct 2012
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All that means is that UA delivered slightly better than the analysts' best guesses, not that UA is recovering.
Jul 24, 2014, 12:23 pm
#282
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If you're part of the financial analyst community, then you applaud UA for slightly over-delivering. But the reality is that UA has yet to make any headway against DL or AA to make up for UA's massive 2012 failure - the year that revenue did not grow at all. DL, AA and US all grew their revenue in 2012, and all have continued to grow revenue at a faster pace in 2013 and the first half of 2014.
Jul 24, 2014, 12:27 pm
#283
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It makes absolutely no sense that they're retiring almost all of those 757s, when DL can keep many of similar vintage in service indefinitely. I definitely don't buy the $2 million annual savings BS either. Many of those 757s were owned, so while they have higher operating costs, there's no payments and shiny new 737s need to have a lot of utilization to make up for the payments. And if age is a concern, DL has many 757s that were built in 1984-1985 range that are still in service and are older than the oldest UA example by 4-5 years.
New fuel efficient airplanes can actually pay for themselves via the fuel savings; at AA, the fuel savings alone from retiring MD-80s pays the lease payments on new 738s. Add in the maintenance savings, and cash flow can be improved by acquiring new airplanes.
Same thing with new 739ERs compared to old 757s, albeit not quite as dramatic as the MD-80 to 738 comparison.
Jul 24, 2014, 12:30 pm
#284
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Thanks for the explanation. I agree the results don't mean UA is recovering. My thought was they can't expect to be competitive UNTIL they recover, so they're more likely to be judged by the investor world based on meeting or beating their plan rather than how they compare against DL or AA. I'm thinking this buys them a couple quarters until they have to start showing results vs. competitors.
Yes, and the fact that UA's market cap is about half that of DL's, is telling.
Jul 24, 2014, 12:34 pm
#285
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Your other points about aviontics (domestic 757s aren't flying to ARN anyways), the PW's (not a valid point), and no winglets is all heresay. See DL.
A 757 without winglets will burn 3-6% more fuel than a wingletted bird. That's fact, and the fuel burn advantage increases over length of haul.
The 757-222s don't fly transatlantic because most are not ETOPS-rated, are not configurated for longhaul ops, and most do not have equipment like GPS, RNAV, SATCOM, etc. which is costly to install and UA would probably not get a return on those investments.
The bottom line is that a 180-odd-seat 757 is a hard airplane to make money with in the domestic system these days. UA could spend a lot to reconfigure them and update, or replace them with aircraft orders already on the books, but something had to be done. Again, UA is not unique in this respect.
Also makes me wonder, if the 757 is such a hog what about the 36 73G? Aren't these also grossly inefficient for many routes that they fly?
They are still cheaper to operate than 757s and the 73G resale market is not as strong at the moment.