HNLbasedFlyer

PRASM doesn't mean much if you don't have a baseline. You should know that.

It also highly varies by market.

spin88

The baseline is prior years, same quarter. @:-) And other airlines with similar market exposure (in the case of United, Delta is the closest competitor) provide a handy benchmark. (This is why I provided DAL's very different and much better numbers, while explaining the disclosed impacts).

You are free to have the opinion that how competitor OALs perform is not relevant, but that is not how either the markets, or analysts, view it.

and P.s. to respond to the assertions above that PRASM is just sort of some weird, unimportant number. If figures centrally in analysis/news articles (see e.g. "United late Wednesday forecast weaker fourth-quarter unit revenue — a much-watched measure of sales in relation to an airline's flight capacity —Late Wednesday, United forecast a fourth-quarter unit-revenue decline of 1%-3%." http://www.investors.com/news/united...220&yptr=yahoo ) and UA itself publishes it in its updates and it is the figure used in presentations.

goodeats21

I don't listen to every one of these calls, but this one seemed much more vague than previous calls. They really didn't have an answer for the lack of progress on a couple of pointed questions. And seemed Oscar had to step in and give a "we are studying things and working on things" punt when his team got flustered on progress and outlook for previously announced investor initiatives.

And I thought it was pretty weak when Oscar said United was behind because their Executive team hasn't been together as long as others. Kirby was plucked from AA, so how does that make sense?

Looking forward to reviewing the transcript to get the most accurate quotes, but from listening in real time, United didn't seem to have their act together.

And after realizing the domestic downsizing was bad, they flood their network with craptastic CR2s from Air Wisconsin.

United really doesn't have a cohesive vision at this point. Feels a lot like flailing about for something to get traction. And their credibility gap is beginning to show.

jasondc

the poster asked for a region where UA has strengthened its footprint since 2001. I gave him it - it's regions that produce high margins and that are growing. Those are good places to be.

SEA - they might have had 40 flights a day, max, at some point. It's not like they had hundreds of flights and are down to nothing. That point has been flogged to death on these forums, and it's truly inconsequential. UA has only so many planes, and chose to fortify their presence in SFO, which is a richer, larger, and higher yielding market than SEA.

JFK - get over it. Take a look at the DOT data and see fares (domestic airline fares consumer report) and check out UA's versus other airline fares on NYC - JFK/LAX. There's a reason UA left JFK for EWR. Maybe a lot of people dont like it, and maybe they've lost some customers, but they still are doing well there.

BKK - Hmm.. Tell me why even DELTA, which apparently has this amazing product etc cant make it work. Oh, it's because BKK is a low yield dumpster fire of a market with low fares. While large, it's simply not worthwhile putting resources there when partners can do it. UA figured that out first, and now Delta has. I dont see anybody rushing in to fill the void when you can get $600 roundtrip tickets in coach from JFK to BKK or $2000 roundtrips in business. Just not worth it.

spin88

United added a few RJ flights from IAH to the Balken, and added service from SFO to BOI and SUN on RJs. I go to SLC all the time, UA has no more presence in Utah than before, and only flies RJs there. I seriously doubt that United's market share is materially higher in any of these places, nor do I see a few adds of RJ routes into a lightly populated set of states (again due to sort term price rises in oil) to show that United is a healthy airline that is enhancing its competitive posture.

Put another way, that you cited Idaho, and North Dakota as the bright spots confirms my point.

jasondc

I also mentioned Montana, which has seen big growth in all markets (Bozeman to Newark being a prime example, along with additional service from all markets such as Billings, Bozeman, Missoula, etc to SFO, LAX, DEN, ORD). Why did you avoid that? Mountain west. A big region, a growing region. With high yield. You cherry picked what I said. As for SLC, I see 738s on today's flights to DEN, all mainline to Chicago, mainline to Newark. How, exactly, is that all RJ? Stop being so sloppy with the examples you cite.

Does UA need work? Absolutely. But you just refuse to look at any of the changes they have made or the strides they have taken, and this undermines your credibility and analysis.

manstein58

Excellent post. Management should customize the classic Ronald "Are you better off now than 2 years ago?" Reagan question to their operations. Other than the much needed jettisoning of SmiJ and the addition of stoopwaffels, and free drinks/snacks in E for 1K's and GS, things have not improved in a material way so to differentiate UA from SW and Virgin to the occasional and maybe more frequent flyer. in fact, they have gotten worse: Polaris rollout has been botched, the United Clubs at my home base of EWR are wrecks not worthy of a Karachi slum, GF is going, no booze discounts for the Chase card, upgrades are being squeezed, G2 outsourcing, food straight out of Sing Sing, and there are still way too many RJ's on routes where a mainline aircraft is supportable. I have the GS handcuffs but should those go, it's even money at best that I choose UA all other things being equal. Whatever tailwinds UA had with Oscar are long gone

spin88

United under-performs DAL by nearly $1/2 Billion this quarter ($482M, but who is counting), and the cumulative damage since Jeff took over in passenger revenue vs. DAL, just in this quarter, is $860M. Next quarter is projected to be as bad, and oh, the stock drops 11% as Oscar says that United ""dug itself into a hole" in regard to the competition.

Sorry, but I don't think assertions about how great United is doing in Montana are exactly a convincing response regarding the very very real issues United has with noncompetitive product and poor service, and an anti-customer mindset that has United viewing its primary competitor as being the likes of SAV.

When United does something like buying consumer friendly/more comfortable aircraft (cs100/cs300; A321neo), or coming out with a PE product, or reversing its horrible decision to go with seats that are .6" narrower than on a 737 in E+ on the 777, or cuts back on TOD upsells, or improving its meal service, or providing decent wines in F and J, or adding expresso on international flights, or stops offering me BE fares when the competition gives me a regular Y, then I will take note.

We have had nearly two years of Oscar, and the only actual "improvement" I can see is getting rid of Freshpoo, and Stupenwaffles. On the bad side we have 3-4-3 E+ on the 777s, more TODs, BE, non-fixed pricing on awards.

jasondc

You asked for a region where they were stronger, not believing there was, and I told you one. Then you backpeddle.

I dont discount the other challenges they have. The other carriers have done many of the same things from a customer experience perspective (AA and the uproar over the reduced pitch on all their 737s, Delta and the reduced pitch on theirs, AA putting 3-4-3 seating on their new 77Ws, etc - why are you not addressing any of those very real things as well?, the WELL PUBLICIZED comments and complaints about AA and their reduction in F service/ lack of product standardization across the various lUS and lAA subfleets, etc), Delta also aggressively pursuing TODs and first class monetization, etc. Other airlines challenges too, but ALL you do is focus on UA. It comes across as rather biased.

Yes, they flubbed BE. Dont deny that and they need to fix it.

entropy

United has a lot of issues with their products and their ongoing structural inefficiency.

Polaris, a year post-launch has a couple 77Ws and only 1 retrofitted plane (the 763). I don't know how you launch such a half-baked product. On top of that, the soft product was nice to begin with, and has been stripped like nobody's business. One year later, there's ONE lounge.

BE was botched, turning people off. And their operational stats are still not where they need to be. The FAs are unified despite the contract. Onboard, the food sucks (its even worse than before, I mean, how cheap can they be in F?)


You can't toot your horn to investors to the degree they've been doing and expect everyone to keep lapping it up when they fail to deliver. Even Hunter might be thinking twice these days.

COSPILOT

Sad to see UA do ok, but underperform it's peers, quarter after quarter. The BE thing seems to me a disaster, and when I see someone with a BE ticket sitting next to me first class as I did months ago, I know something is wrong.

Maybe UA can boost revenue by begging Discovery Channel to create a new reality show, but instead of Gold Rush, it can be called Flight Rush.

Having met Oscar, I have no doubt he wants the best for UA, but year after year of trailing your peers with multiple excuses is getting old. Hub problem, weather, etc. stop with the excuses and find a way to change it.

tuolumne

Hunter’s been out there the last week trying to plant seeds for UAL to acquire Jet Blue. Ok Hunter.

Halo117

Those are valid arguments for the AA and DL forums and on those forums folks have voiced their opinion, but i think the crux of the issue and why we have this open debate is that FT feels UA should see the bar set by peers and attempt to go above it not under it and say "good enough". Put it another way "UA is making pizza so cheap fewer folks are buying it". When your equivalent sized peer (DL) is more than double on returns for just 1qtr., something is wrong.

As a general question, did the call mention anything about Polaris rollout or retrofits and how much capital or why the delays?

goodeats21

One of the media folks asked about it, in fact referenced blogs in his question that were complaining about the slow rollout.

Nothing illustrative in the answer that I can recall. Planes take time, everybody loves Polaris, it is more than just the seat, blah blah blah.

EWR764

I am happy about the Polaris soft product, especially the bedding, but my well-founded fear is that it will be cut back significantly long before enough of the new seats are in service. Pushback on costs in this quarterly earnings call tells me more 'enhancements' are on the way.