BearX220

After the Berlin Wall came down in 1989 a Big Thinker named Francis Fukuyama wrote a book called "The End of History." His thesis was that with the USSR's collapse the world was now permanently, stably capitalistic and democratic. No more turmoil.

Within a few years, of course, Fukuyama was proven dead wrong, and his thesis fatally myopic. And many current cheerleaders for a new, more stable, more profitable quasi-cartel of airlines, less wracked by competition and therefore able to be less nice to most customers, sound a lot like Fukuyama.

This is not the endpoint of commercial aviation history; there is no such thing. The industry runs in cycles and we happen to be at the apex of a good one -- for the airlines. It would be terribly silly to argue either that permanent stability is here, or that Smisek deserves credit for architecting same. As many have said he is the beneficiary of macro forces -- as are so many of his and United's most strident defenders, expensing crazy sums to fly up front on the corporate dole.

There's always more to come: recessions, terror attacks, public disgust and revolts, collapses in discretionary travel, audacious and disruptive new entrants, labor meltdowns, and the many unanticipated consequences of high fares, bad service, and gutted loyalty programs. (And when economies and markets crash, business travel collapses too -- or at least captains of industry fly Y.) Long term, the pie (or egg, as that's the standard cliche) is on the faces of anyone who declares a permanent state of affairs.

A prescient observer, or at least a student of history, would be a little less smug. And if I were Smisek I'd be plotting to grab my $14 million and eject before the next mountains fill the windshield.

Indelaware

+1,000,000

1kBill

UA management are most likely getting sore from patting themselves on the back based on UA's stock performance, but those gains are mainly from the business environment and little if any are from management actions.

However, I truly believe that the current management team at UA is destroying the brand. Maybe that is their goal. And when the business environment changes, they - or their successors who haven't taken the money and ran - will struggle greatly trying to get it back.

mre5765

No it is a mediocre gain as compared to rest of the industry.


http://finance.yahoo.com/echarts?s=A...2%3A1%7D%7D%7D

AAL, despite heading to the brink of bankruptcy, out performed all of them, out classed actually, without alienating elites.

Stick with the stock of companies that treat customers well. In the long you will do better, or in the case of commercial aviation, lose less money. Airlines are not an investment; they are merely a way to convert $1B to $1M.

SunLover

Really? Per Yahoo Finance:

3 Months:
UAL: +28.94%
DAL: +22.17%

6 Months:
UAL: +45.38%
DAL: +18.71%

12 Months:
UAL: +79.09
DAL: +71.20

5 Years:
UAL: +498.73
DAL: +329.60


SunLover

mre5765

For the 5 year period OP noted, AAL out classes them both.

zerolife

Disagree, UA is usually on the higher side. I found Delta to be quite competitive with the prices followed by US with UA last among the legacy carriers.

As for the product, I haven't flown in First/Business with the other carriers but UA not having an IFE in First on many of its planes is not acceptable. UA I believe is also ranked the worst in terms of delay among the legacy carriers.

Mrtrash757

I think it is safe to say that the glory days of travel are gone.

I think UA is not only doing a poor job at what they do, they are also missing opportunities.

I feel that there is money to be made in terms of food (offering premium Y meals at booking- something you dont see here, for a good price) mainly. but then again I love food

Shareholders and Wall Street may be happy but there s still room for improvement. and this goes for everyone in my book, even my favorite Delta

spin88

Delta has gone up 350.84 since I bought it (dec 2012), UAL went up 207.33% in the same period. I am quite happy with Delta, much more so given that I bought Delta as I figured United would under-perform due to a bad business plan.

You either purposefully or by accident picked inflection points that make the under-performance under Jeff look better. 2009 is irrelevant, Tilton was in charge, and the airlines were in BKR. Jeff took over in 2011, and the merger change over happened on 3/2/12. United underperformed, and then in the last year has done better as people are bidding up the stock hoping for a redemption story.

I don't think redemption is coming, but lets see the 4th Q 2014 and 1Q 2015 results, that will either confirm the recovery story, or show further under-performance.

BTB, from March 1, 2012 (right before jeff's plans were put into action, Delta is up 401.35%, United is up 222.39%.

But any measure, while Jeff has been in charge, Delta has done better.

kettle1

Another way to look at it. 12/11/2014

How does DL (#3 carrier) have a market Cap at 40.31B and UA (#2 carrier) is at 24.28B?

Simple answer - no.

He copies almost everything DL does (except the good things).

He charges for booze International Y, Poor moral with his employees, unable to work with the FA's to "merge" this company into "one", poor on-time rankings (ranked just above AA - not including US), the integration was completed on March 3, 2012 and is still a long way from being completed. He signed off on removing limes for flts when every other carrier still provided them (except AS).

He has also moved many flts to RJ's (more than any other carrier) - even on long flts. He has cut the quality of food offerings, been slow to react to changes in the airline business.

Getting 23,000 FA's a iPhone 6+ device starting in Q2, instead of having 1-6 on each aircraft (depending on the size of the aircraft). That would have been a "smart" move.

Setting up a hedge fuel company outside of Cook County in IL (to avoid taxes). As a businessman myself - that was actually smart.

Getting rid of channel 9 on most flts.

Etc, etc, etc.

My brain is going to blow up if I try to think of any other negatives. Their are plenty more.

Positives: The stock is up - thanks to the price of fuel dropping. Big time.

FlyWorld

1. 40.31 - 24.28 - 16.03B that should be in the pockets or balance sheets of UA shareholders but, instead, is sitting in the pockets or balance sheets of DL shareholders because he's destroyed so much value under his tyrannical reign.

2. Hundreds of millions of dollars of "special" charges representing losses from incompetence and poor performance that he was able to make "disappear" from his performance evaluation simply by putting the word "special" in front of them.

3. Firing UA's most loyal customers because they were inconsistent with the CO cultural framework and deemed over-entitled. Which most certainly is a factor in (1).

Great job. Rah. Rah.

AMflier

I may be a small fry, but Jeff is seeing less of my money this year. I would not consider his tenure awesome.

I'm a NYC based occasional flyer: 10 - 15 RT / year. Almost all domestic. A lot of transcon. All in Y. All purchased at least 21 days out. They aren't making top dollar off of me. No status, although I could get the lowest tier on someone if I tried.

About 2/3's of my travel I book myself, about 1/3 is booked by clients. Over a given year I generally fly all of the legacies.

If I book myself, I will choose B6, WN, VX, or AS. They respect their Y customers.

If I'm forced by route or fare to fly on someone else I pretty much considered all of the legacy airlines equally until the FF devaluations. Now, domestically I'll go with AA/US first, UA Second and DL last. Internationally I try to avoid the legacy carrier's metal.

I view the DL FF devaluation as a slap in the face. They basically said to me that they no longer value my business. UA, by copying DL doesn't fare much better in my mind. I had been willing to fly them over DL until the carry on size clamp down.

That leaves AA/US now as my first legacy choice. For me, UA has slipped from a tie for the top amongst legacies to a tie for the bottom. (It's admittedly a small field)

Awesome......NOT!

adagio

Really not much at all like Fukuyama. He was arguing that the Hegelian notion of history as being an ongoing struggle between great ideas was ending, the sort of thesis, antithesis, synthesis thing you would have learned in undergrad philosophy before it became more trendy to say things like "postmodern" in cocktail conversation. Fukuyama was not at arguing that society at the endo of history would run smoothly and avoid problems, just that that struggle between big ideas, in this case capitalist western liberalism versus centrally planned communism, would end, and thus be the end of history in a teleological sense. The rest would of life be simple administration, or in the parlance "making the trains run." Smisek's failures are not a proof of the end of history, but instead indicate that life can still be bad if administration is bad, that the "trains" do not run. There is no conflict of big ideas. It is just failed administration, not a conflict of world views.

Of course, Fukuyama was wrong---he missed that the conflict in world view would turn to western liberalism/modernism against religious fundamentalism, whether the fundamentalists are US Christian or Middle East Muslim fundamentalists. History, in the Fukuyama sense, has not ended. And, in any event, making the planes run on time is difficult whether or not history has ended.

drvannostren

I'd like to thank anyone who replied without just slamming the guy/company.

This is very interesting.

I wonder out loud to the Americans in the audience, is Smisek just way more visible than the DL/AA CEOs? I only really know his name from here, I've seen his picture and seen him on the UA videos and 1-2 interviews, but that's more than I've ever seen the AC CEO Calin Rovinescu, I read his monthly letter in the magazine, but that's about it.

Maybe Jeff could do himself a favor and step behind the curtain a bit more?

atword

You are right that many don't look it up. This is why they book on G4, NK, SY, or F9 and then howl when they run into the fees and crammed seats.

Infrequent flyers with some knowledge will usually choose WN if they can because "bags fly free". If they happen to get a new plane with IFE they will love it. So, initially they may not choose a carrier based on IFE or other comforts, but when they like the experience I think they will be back the next time they fly. The positive experience can be anything that will resonate with the customers...free bags, good IFE, new planes, or even a smiling flight attendant.

My opinion is Smisek and his team are too focused on statistical accounting and therefore miss opportunities to make United into the leader it should be.