anc-ord772

Maybe they can invest in IT to complement all those shiny new planes and refurb some sUA 752s.

cerealmarketer

Looks like it's 11 of the 763s and they will go to 2 class.

TravellingMan

All the FT posters were right. I dont make any difference to UA's bottom line. Most of my domestic went to WN and long haul to the cheapest carrier - AC, SA and BA. I can sleep well at night knowing that I did not put SMI/J out of a job

EWR764

You can almost guarantee it. The 6F seats (really 5 when considering one is used as crew rest on longhauls) take up so much real estate that it likely offsets a revenue premium and compares negatively to the revenue which would be generated by additional J (or even Y) seats occupying that space on the airplane.

There is less FC demand today than in 2007/2008, and that trend is headed downward. The ~215-seat 67E configuration of the former Ghetto Birds is really solid for that airplane, and with 777s being replaced by 787s on certain routes, there may be more 3-cabin 777s around to deploy on markets which actually command a premium for FC service.

PV_Premier

since UA 777 F is so "exclusive" and "premium"

anc-ord772

There are 21 3 cabin 763s currently. Eleven to be converted, 4 with scheduled retirement dates, which leaves 6 more to be retired at some point. Long term, 25 2 cabin 763s, down 10 frames.

EWR764

For better or worse, there are certain markets where customers demand it and it drives a reasonable revenue premium. Certainly not systemwide, but it does.

pk45cu

It helps UA that it screwed Q3 2013 so badly that it's easier to show better than DL/AA RASM increase this year.

787fan

I'm talking about absolutes not PRASM changes

By and large, UA's results match AA despite all the doom and gloom we read about all the time

spin88

First, these are good numbers from UAL. Headline number was $1.1B, and nothing jumps out as being inappropriate to me in the specials (although they recorded $28M in “integration related costs” it seems late to be still claiming these, but its not material). To those who are complaining about DL putting 747 charges in special, well UAL put E-135 charges in “specials” this quarter - same treatment. So that dog will not hunt.

Passenger revenue was 9.3B (+2.1%), Other was 1B (+2.8%), total was 10.56B. PRASM was 14.25 c/mi (up 3.9%), yield was 16.61 c/mi (up 4.1%)

ASM was +.5%, RPM +.4%

Cost side, the headline CASM figure (13.34 c/mi down 4%) was very good, but if you look at it ex special charges, tpe, and fuel, it was 9.39 c/mi which was +1.1%. Given the very heavy cost cutting, that figure is surprising to me.

My takeways:

(1) United by holding its ASM flat, and evidently making changes to its revenue modeling, was able to charge far more for its seats than before. This result was the result of yield gains. Its very good, should make everyone at UAL very happy. However, whether they can maintain this in the face of more competition in a slack quarter (see 4th Q/1Q) is an open, and very interesting question. Its easy to push up yield in a tight (summer) quarter in place with less competition, but that has its limits.
(2) I’m surprised that core CASM was +1.1%. That can’t make anyone feel good with very large cuts in costs ongoing.
(3) This result is only going to make the negotiations with its Unions harder, and settling that piece more expensive.

This all said, I’m surprised that no one has comment on the NEGATIVE investor guidance UAL just issued. 4th Q PRAMS is to be between (1%) and +1%, so the midpoint is supposed to be flat. They also record not very good advanced booking rates (which may be in fairness the result of holding back more seats, the flip side of the RM changes). Further domestic capacity cuts (down midpoint of 1.5%) are coming.

With what is a good report (beating slightly estimates) UAL is down 1%, while DAL/AAL are both up over 2% (DAL up over 3%) which says something very interesting. The price will bounce around, but it will be interesting to see how the market has digested the forward guidance over the next week or so.

I've not looked at DAL or AALs numbers enough to do any real comparison at this point.

cerealmarketer

Delta is posting a 0 - 2% guide on the same metric, midpoint at 1%.

Guessing there were some people short covering on Delta with the others reporting today.

spin88

Thanks for the figure, I looked and could not find their guidance. I did pull and review DAL's release, and a few thoughts.

Delta’s ex specials were $1.6B. It was a very good gain, off a very good 3Q 2013, which is harder to do. I don’t see any issue with the specials, they are similar to what UAL (and AAL) have taken. Going to ex-SEA vs. NRT connections, the 747 change is to be expected.

I would highlight that DAL’s passenger revenue was up 6% to 9.7B, and its total operating revenue was up 7% to 11.1B. Delta is now bigger than UAL in revenue. Delta’s yield was up 2% (to 17.16 c/mi) and its PRASM was up 2% (to 14.83 c/mi). Delta is growing, and that would put pressure on yield/PRASM growth.

At some point DAL (with the highest yield at this point) will be unable to push up yield/PRASM much further on existing routes where they have competition, which is why you see them pushing to take over new areas (see West Coast Expansion). This strategy will either work out for them, or it will not, but I would expect it to put pressure on the incumbent carriers in those areas, and (Delta clearly feels) make DAL more attractive to corporate travel managers. It will be interesting to see if it helps them at y/e contract renewal time.

Cost side Delta did better than UAL, its CASM-ex was 8.66 c/mi which was flat.

My take away is that the figures I see from DAL were very good, and what I would expect to see with them taking on new routes and making changes to their network. United is retrenching, and trying to get more out of existing routes, DAL is expanding, taking on new routes, and what we are seeing from both carriers is about what I would expect.

p.s. as I have repeatedly disclosed, I have a lot of money invested in DAL and I was not unhappy with their results. The long term question is how their current moves (which are quite large and aggressive compared to what other carriers are doing) will pay off or not. But I would rather own the growth stock in the industry...

787fan

The Q4 "investor guidance" is just saying PRASM will be flat, which is entirely different from saying earnings itself will collapse YoY

sbm12

Up another 10% to ~$22/pax.

RNE

Who knew the CLE hub cost UA a billion dollars a quarter to maintain.

Seriously, this is no aberration; it looks like Smisek and Company's master plan to treat loyal customers like crap is a good business model after all. ^ Take that you cheap elites!

RNE, not holding my breath while waiting for the naysayers to eat crow. It's just deserts.