1kBill

Saw this via Yahoo, did not see any other posts referring to it. Mods, if this belongs elsewhere, please relocate.

United Should Shrink in Cleveland and Los Angeles, Grow in Frisco, Analyst Says

United Airlines should announce at its impending investor update that it will grow in San Francisco and shrink in Los Angeles and Cleveland, says a leading airline analyst.

As Wall Street looks ahead to United Airlines' (UAL) scheduled June 21 update on earnings initiatives, Wolfe Research analyst Hunter Keay is suggesting potential changes to the carrier's route structure.

In a report issued Friday, Keay said United could move routes from Los Angeles International Airport, a congested airport where no carrier has been able to build a sizable hub, to San Francisco International Airport, where United's hub is the best on the West Coast.

Balance of article is here.

It seems to me that Jeffrey & Co took many of his prior suggestions to heart, and we can see how well that worked. If this guy is so brilliant in airline operations, why doesn't he go get a job with an actual airline?

Goaliedad30

The first rule of SFO is you do NOT talk about Frisco. :-)

DA201

He compares moving from JFK to EWR to moving from LAX-SFO, so it's hard to take parts of the article seriously. JFK and EWR are both NYC airports, which are about the same distance from Manhattan (EWR is actually closer to Wall Street and the financial district), while LAX and SFO are two distinct Cali cities. UA can't just ignore LAX. The city is too big. Now, routes with LAX but not SFO service could see a city switch (MEL is the only city I can think of off the top of my head), but you can't just cut off LAX completely.

Not really sure what capacity he wants cut at CLE. There are few CLE routes that don't go to hubs, and they are to destinations with a lot of O&D (MCO, DCA, BOS, LGA, CUN, MKE) and some seasonal routes (FLL, SJU, RSW, CHS). UA has made sure it's remaining CLE routes have good load factors and yield, as they have been quick to cut flights. Many FF's in CLE are still UA based, so UA has a bigger base than the other carriers.

transportbiz

+1 Keay once again showing his ineptitude.

FlyingNut724

Keay is a moron and should shut his trap. Look at the damage he and Smisek (following his advice) have already inflicted on UA and its shareholders.

bmwe92fan

I don't blame the guy for being what he is - a FINANCIAL analyst trying to maximize stock price and his return. There is a reason these guys are analysts and not actual operators - and HK is living proof of it - with HK at the helm UA would be the most profitable airline in the world for a month - flying one plane on one route with the pilots doing cabin service...

JetAway

I don't understand why this guy gets so much play. Is he the only analyst in the world that specializes in UA? Actually, he probably is. Not sure why anyone else would want to waste their career that way.

bocastephen

"Leading airline analyst"? He is a bullying gasbag who brings nothing to the table, certainly not any actual industry acumen or securities research talent, but rather the ability to constantly screech the same anti-customer mantra which inevitably involves charging the customer as much as possible while giving them absolutely nothing.

The sooner someone flushes this annoying fool down the toilet, the better it will be for everyone - airline executive, employee and customer alike.

Longboater

Isn't this is the same clown who thinks UA should dehub IAD and give the DC market on a silver platter to AA?

porciuscato

I wonder if he actually wrote "Frisco." I wouldn't be surprised since he seems ignorant of CA geography.

I sent my wife through SFO today. There were 90-minute ATC delays. In fact it's been that way the last 3 times I've flown through there myself (just in the last couple of weeks). It's quite typical.

The problem is that with even a little bit of a low cloud ceiling, SFO effectively has only two runways. And they cross each other. So it's really like more like one runway. Increasing traffic there would be plain stupid.

FlyingNut724

I'm wondering if Hunter's plan is that every major airline should retreat to its most powerful hubs and not compete with each other. Thus, each airline will only compete on a limited basis with each other airline. This will give each airline maximum pricing power with respect to travelers in their own hubs, and raises the stock prices of the airlines as a whole. Of course, it also raises massive anti-trust issues.

Longboater

Well, DL is probably the biggest beneficiary of zilch competition in ATL, DTW, MSP, and SLC. WN and ULCCs are not really competitors to DL in my estimation. Only in ultra-competitive NYC/LAX markets and their hub-from-scratch SEA does DL really have to compete. And yes, DL continues to do better in SEA quarter by quarter, shocking some many people on this forum. Of course, it took DL almost decade to record a profit in NYC after they began to build up during bankruptcy. With their current financial situation, DL can burn through cash at SEA for years and still not a make a dent in their performance.

luckypierre

It is unfortunate when Mr Smisek exited the stage, he did not take his chief Wall Street guide with him.

FWAAA

No, that was Bob McAdoo, former AA management who was beaten senseless by his former employer when he ran Vanguard into the ground (thanks to aggressive competition by AA).

Hunter Keay is a doofus, but he did not write "Frisco." The article was written by Ted Reed (another dim bulb) and published by The Street, and either Reed or his editors wrote the headline.

Longboater

Well both are doofuses since they essentially want UA to cede to prime markets to AA and a to a lesser extent DL. These idiots would do more damage to UA than $mi$ek could have ever imagined.