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UA Announces Q1 2016 Results / Conference Call 21 April 2016

UA Announces Q1 2016 Results / Conference Call 21 April 2016

Old Apr 14, 16, 2:11 pm
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UA Announces Q1 2016 Results / Conference Call 21 April 2016

United Airlines to Issue First-Quarter 2016 Financial Results
Company will announce first-quarter financial results after market close on April 20
Company will host live webcast on April 21

CHICAGO, April 14, 2016 /PRNewswire/ -- United Airlines will issue its first-quarter financial results and second-quarter investor update after market close on Wednesday, April 20. The company will hold a conference call to discuss first-quarter 2016 financial results on Thursday, April 21, 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.
United Airlines Announces Strong First-Quarter 2016 Performance
Mainline on-time arrival improvement of 14 points year-over-year; best quarterly on-time performance since the merger
UAL reports meaningful EPS of $1.23 excluding special items; $0.88 including special items

CHICAGO, April 20, 2016 /PRNewswire/ -- United Airlines (UAL) today reported its first-quarter 2016 financial results.
• Excluding special items, UAL reported first-quarter net income of $435 million, earnings per share of $1.23 per diluted share and pre-tax earnings of $688 million.
• Including special items, UAL reported first-quarter net income of $313 million, earnings per share of $0.88 per diluted share and pre-tax earnings of $494 million.
• During the first quarter of 2016, the company repurchased $1.5 billion worth of its common stock, representing approximately 8 percent of shares outstanding.


"I am extremely proud of United's nearly 86,000 aviation professionals for their contributions to these strong results – including the improvements in our reliability, customer satisfaction and financial performance," said Oscar Munoz, president and chief executive officer of United Airlines. "As we accelerate United's path forward, we will continue to focus on running a great airline today while innovating for tomorrow."

First-Quarter Revenue
For the first quarter of 2016, total revenue was $8.2 billion, a decrease of 4.8 percent year-over-year. First-quarter 2016 consolidated passenger revenue per available seat mile (PRASM) decreased 7.4 percent and consolidated yield decreased 6.1 percent compared to the first quarter of 2015. The decline in PRASM continues to be driven by economic factors including a strong U.S. dollar and lower oil prices. In addition, the company experienced a larger-than-anticipated decrease in close-in business travel during the weeks surrounding the Easter holiday and spring break.

The company continues to focus on providing customers options to personalize their travel experience and, this quarter, launched its new bundled products offering, which is exceeding expectations.

First-Quarter Costs
Total operating expense excluding special charges was $7.4 billion in the first quarter, down 5.7 percent year-over-year. Including special charges, total operating expense was $7.5 billion, a 4.1 percent decrease year-over-year. The decrease was largely driven by lower oil prices. Consolidated unit cost (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.3 percent compared to the first quarter of 2015. Consolidated CASM including those items decreased 5.7 percent year-over-year.
Liquidity and Capital Allocation

In the first quarter, UAL generated $1.2 billion in operating cash flow, $376 million in free cash flow and ended the quarter with $5.3 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the first quarter, the company continued to invest in its business through gross capital expenditures of approximately $820 million, excluding fully reimbursable projects, and repurchased $1.5 billion worth of its common stock, representing approximately 8 percent of shares outstanding.

UAL earned a 20.8 percent return on invested capital for the 12 months ended March 31, 2016.
For more information on UAL's second-quarter 2016 guidance, please visit ir.united.com for the company's investor update.

Results PDF


21 April analyst conference call recording

Q2 Investor Outlook link

UCH Form 8-K 20 April 2016

Past results

UAL Reports 1Q-2015 Earnings of $508m Net, 77W Orders, Other Fleet News

http://www.flyertalk.com/forum/unite...-jan-16-a.html

**** Additional Sites reporting on UA/Industry Q1 results

Last edited by WineCountryUA; Apr 21, 16 at 9:42 pm Reason: Q1 release, Q2 Investor Update, 8K, conference call link
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Old Apr 20, 16, 2:32 pm
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United Announces 1Q performance

http://newsroom.united.com/2016-04-2...16-Performance
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Old Apr 20, 16, 2:51 pm
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Revenue down 5%?
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Old Apr 20, 16, 2:51 pm
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Sounds like strong improvement on multiple fronts, particularly with the on time performance. I see they noted that the company is focused on getting contracts with the FA's and technicians. With Oscar back and improving employee morale, maybe they can achieve a combined contract for both by year's end (wait haven't I said this before?), especially since AA has already set a date for combining flight operations for the pilots and flight attendants.
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Old Apr 20, 16, 2:57 pm
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Back to reporting completion as mainline only instead of consolidated?

Seems like they are cherry-picking a bit?
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Old Apr 20, 16, 3:02 pm
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Originally Posted by goodeats21 View Post
Back to reporting completion as mainline only instead of consolidated?

Seems like they are cherry-picking a bit?
The monthly reports have the consolidated numbers.
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Old Apr 20, 16, 3:05 pm
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There are some bright spots, but a lot of hangover from years of bad decisions

Mainline PRASM (cents), which was down 8% is a highlight, consolidated -7.4%, that's quite a lot. Cargo was way down, and cargo revenue down even more.

Without oil tanking, they'd be losing money. Revenue is down a lot, and opex ex fuel is up. And despite buying back quite a bit of common stock, the fully diluted EPS is down almost 20%. The new board has their work cut out for them.
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Old Apr 20, 16, 3:11 pm
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Originally Posted by WineCountryUA View Post
The monthly reports have the consolidated numbers.
Also unclear if the 71.9% number is A:0 or A:14.

Operational performance is getting better. Financial performance, not so much. There is typically a lag on the impact of such so maybe it'll show up eventually, but not great right now.
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Old Apr 20, 16, 3:25 pm
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While these results are solid, Delta put together a much stronger quarter from a financial perspective. This, plus the Board shakeup and (seemingly averted, for now) threat of a proxy war has to serve to light a fire under the collective rear ends of this management team and BOD. The honeymoon is over, Oscar is back in the saddle and it's time to start delivering improved results before the economic pendulum swings back the other way. If Oscar can't get the workforce unified, and United's financials continue to severely lag Delta, people will be calling for Oscar's head within a year. There's very little leeway given United's chronic underperformance.

It's evident, however, that cutting costs will continue to put United at a disadvantage relative to the competition, so I am hopeful we won't see more of the Smisek-era devaluation of the product to mask the fundamental issues that the airline was (is?) simply getting wrong.
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Old Apr 20, 16, 3:56 pm
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Originally Posted by sbm12 View Post
Also unclear if the 71.9% number is A:0 or A:14.

Operational performance is getting better. Financial performance, not so much. There is typically a lag on the impact of such so maybe it'll show up eventually, but not great right now.
Major hangover from the Smisek years. People are going out of their way to avoid UA after their merger disaster. I think UA needs an image change to really shake things up.
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Old Apr 20, 16, 4:06 pm
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Good to see more improvements in the long-term foundational blocks. UA continues to improve in things they can directly control. The profit isn't something to write home about, but Q1 never has been great for UA. Cost changes continue to beat competitors. Domestic was solid. Operating performance was very good. Profits will soar when the broader market improves for them. Low oil and a strong dollar is really hurting them.
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Old Apr 20, 16, 4:14 pm
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Originally Posted by REPUBLIC757 View Post
Major hangover from the Smisek years. People are going out of their way to avoid UA after their merger disaster. I think UA needs an image change to really shake things up.
Agreed. I think this has to get fixed before oil prices go up again and then they are screwed.

Anyone know if UA has been hedging any of their oil exposure? I wouldn't necessarily do anything near-term, but I feel like longer-dated hedges might be smart.
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Old Apr 20, 16, 6:10 pm
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Originally Posted by REPUBLIC757 View Post
Major hangover from the Smisek years. People are going out of their way to avoid UA after their merger disaster. I think UA needs an image change to really shake things up.
Nothing brightens the mood like a Tulip in the spring
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Old Apr 20, 16, 6:15 pm
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Another bad 1Q....

Since Jeff took over, each 1Q has been bad, and I'm viewing this as more evidence that United is losing yet more high value passengers at year end. We now have 5 years of quarters (2012-2016) and I don't see anything in common macro wise to suggest under-performance, other than the loss of high value traffic giving up on United at year end.

The losses at this point are staggering.

In 2011 United had $7187M in passenger revenue, and PRASM of 11.94 c/mi; Delta had $6575M in passenger revenue, and PRASM of 11.69 c/mi.

This quarter, UA had $6970M in passenger revenue, and PRASM of 12.00 c/mi, and Delta had $7762M in passenger revenue, and PRASM of 13.35 c/mi.

The cumulative change is that United's passenger revenue has actually fallen by (3.1%) and Delta's has increased by 18%, in PRASM United's rose by .5%, Delta's was up 14.2%.

So Delta both attracted more traffic, and got them to pay more, than United did over the last 5 years.

If one assumes that United had matched Delta in PRASM growth over the last 5 years, United would have another $954.9M in revenue this quarter! [This is just the change due to PRASM, UA also lost traffic overall.] The cumulative losses are just staggering. United's under performance (vs Delta) cost them $195M of this for this quarters further falling behind.

United, with what was by far the best hubs, and the biggest network c2011 managed to get out run (by a lot) by an airline with substandard hubs, an airline that has had to (at great expensive) try to build out its network. Although a few here has steadfastly said its all network and schedual, I think very substandard product, substandard CS, substandard OT, and what became a not really better mileage program all have caused this massive erosion in revenue. Bottom line, people are not buying (unless its cheaper, by far) what United is selling...


Originally Posted by EWR764 View Post
It's evident, however, that cutting costs will continue to put United at a disadvantage relative to the competition, so I am hopeful we won't see more of the Smisek-era devaluation of the product to mask the fundamental issues that the airline was (is?) simply getting wrong.
+1. United badly needs a turn around plan. When they launched "flyer friendly" I said it was a big mistake to waste that bullet, w/o real improvements it would fall flat, and do more damage than good by not matching the reality on the ground, while chewing up some of the good brand history. People are now cynical, and only a major change in direction, with real improvements, is likely to turn around this sinking ship, before the next fuel/demand shock. I see little sign of this. No revolutionary hard product, ongoing sub-par domestic product (bad seats, no IFE), and an ongoing gap in F/B.

There is simply nothing to get people to try United again, nor if they did, would they be likely to switch more travel to United vs. DAL, AAL, or overseas carriers.

Last edited by spin88; Apr 20, 16 at 6:26 pm
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Old Apr 20, 16, 6:46 pm
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Originally Posted by PsiFighter37 View Post
.... Anyone know if UA has been hedging any of their oil exposure? I wouldn't necessarily do anything near-term, but I feel like longer-dated hedges might be smart.
The Q2 Investor Outlook states
Fuel Expense: Based on the April 14, 2016 fuel forward curve, the Company expects a total second-quarter 2016 hedge loss of approximately $40 million, or $0.04 per gallon , which is recorded in fuel expense in the income statement. For the full-year 2016, the Company expects a loss of $235 million, or $0.06 per gallon.
Searching on the full announcement will highlight numerous lines detailing the financial impacts in Q1 of hedging.
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