UA Announces Q3 2017 Financial Results 18 Oct/ Conference Call 19 Oct
Oct 20, 2017, 5:58 am
#76
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UA has needed such a thing since at least 2000. The only "top-to-bottom" plan since then was Smisek's, circa 2011-12, and it was a top-to-bottom disaster. Chaos before, after, and now.
In a market that downgrades / stigmatizes Chipotle for failing to cut labor costs further -- even though skilled and properly compensated workers are a key success driver -- the strategy you suggest is a political non-starter. There's no tolerance for short-term pain. In fact UACO officer bonus plans are almost entirely tied to short-term gains.
Originally Posted by aoumd
Short term pain for long term gain. If your margins are going to be subpar for a while it might as well be because you're doing the things that will bring customers back...
Oct 20, 2017, 6:17 am
#77
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The constant bait and switch of, we're investing into domestic first class, oh wait just kidding. We're reinventing international soft product with polaris, oh wait just kidding. There's no consistency anywhere. Improvements are made --only to be clawed back into arguably not much better or even worse than what they used to be.
In a market that downgrades / stigmatizes Chipotle for failing to cut labor costs further -- even though skilled and properly compensated workers are a key success driver -- the strategy you suggest is a political non-starter. There's no tolerance for short-term pain. In fact UACO officer bonus plans are almost entirely tied to short-term gains.
Oct 20, 2017, 7:01 am
#78
Join Date: Apr 2013
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I am not surprised to see any of this transpire...I fly UA every single week. Some weeks more than one roundtrip. International and domestic. I have also flown AA and DL in F this year. And my personal impression is that their F cabins are better domestically and that UA has made upgrades the most difficult among the three. I am currently on a streak of 6 instruments missed in a row on domestic flights. The message is loud and clear. Want F, pay for F. Problem for them is that if fliers have choice and can pay for F, they go with the best product. And it is not UA.
I am a true captive flier with zero choice, so their "strategy" of denying me upgrades and selling it to Mr Magoo for $50 works great. But I am not the norm. Now, awards are more expensive as of 11/1 (again) and that further devalues the program. For me personally, CPUs are impossible, instruments rarely clear and the RDMs worth less than ever. The only thing that they have the others don't? AUS-EWR multiple daily non-stop frequencies. And easy access via partners to my family near FRA and SFO. That
Good luck to UA. I actually feel bad for Oscar. I think his heart was in the right place and he was beginning to right the ship with a concise message but then the board insisted on Kirby and Kirby has done everything in his power in the last year and change to undo any of Oscar's progress and dive the airline into a chaotic state again in which front-line employees are confused and sub-par financial results will be the norm.
I am a true captive flier with zero choice, so their "strategy" of denying me upgrades and selling it to Mr Magoo for $50 works great. But I am not the norm. Now, awards are more expensive as of 11/1 (again) and that further devalues the program. For me personally, CPUs are impossible, instruments rarely clear and the RDMs worth less than ever. The only thing that they have the others don't? AUS-EWR multiple daily non-stop frequencies. And easy access via partners to my family near FRA and SFO. That
Good luck to UA. I actually feel bad for Oscar. I think his heart was in the right place and he was beginning to right the ship with a concise message but then the board insisted on Kirby and Kirby has done everything in his power in the last year and change to undo any of Oscar's progress and dive the airline into a chaotic state again in which front-line employees are confused and sub-par financial results will be the norm.
Oct 20, 2017, 8:55 am
#79
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Interesting article - post Conference Call.
https://skift.com/2017/10/19/many-in...ggish-quarter/
https://skift.com/2017/10/19/many-in...ggish-quarter/
“When I look at your absolute earnings, they’re down more than your competitors’,” Oglenski said on the call. “Your relative margin gap is widening, not narrowing. And more importantly for the investors on this call, the stock is now down, let’s call it, 20 to 25 percent versus the market this year.”
The shares tumbled 12 percent to $59.78 at the close in New York, the sharpest decline since Oct. 21, 2009 — a day when two major airlines reported losses and failed to reassure investors that business travel was recovering from the recession.
United has dropped 18 percent this year, the biggest slide on a Standard & Poor’s index of the five biggest U.S. airlines. The industry gauge has climbed 4.1 percent.
The shares tumbled 12 percent to $59.78 at the close in New York, the sharpest decline since Oct. 21, 2009 — a day when two major airlines reported losses and failed to reassure investors that business travel was recovering from the recession.
United has dropped 18 percent this year, the biggest slide on a Standard & Poor’s index of the five biggest U.S. airlines. The industry gauge has climbed 4.1 percent.
Oct 20, 2017, 9:09 am
#80
Join Date: Aug 2007
Location: Chicago: ORD, MDW
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It is obvious that United's strategy is pleasing nether investors nor passengers.
I applaud Oscar's good will ^and having finally taken great steps to unify the work force^^, but I believe that the business plan centered on attracting and keeping full fare paying passengers with little or no regard for the rest of the business has not been -and will not ever be- successful. Polaris is not living up to expectations and is now going to be out done by Delta's new offering - even before Polaris has even been completely rolled out. There are many who are waiting for a true Premium Economy which will make some happy, but will drive others farther to the back of the bus.
I have no problem with providing those who pay more with more and better service; however, at the same time United has chosen to make everyone else miserable in getting them (safely- I agree) from point A to point B. United has managed to disappoint huge numbers of elites at whatever level by offering less and demanding more while disappointing even the casual flyer. There is even some indication that basic economy is not all that attractive or financially productive. WN has mostly better pitch, fewer fees, and has the reputation of respecting even passengers flying on the lowest fares.
I propose that the good will being generated by the 747-400 retirement is a sign to United that there is a great deal of loyalty and support out there just waiting to be given a reason to be loyal and supportive. Will United understand this?
When will United learn that it cannot afford to alienate any paying customer?
I applaud Oscar's good will ^and having finally taken great steps to unify the work force^^, but I believe that the business plan centered on attracting and keeping full fare paying passengers with little or no regard for the rest of the business has not been -and will not ever be- successful. Polaris is not living up to expectations and is now going to be out done by Delta's new offering - even before Polaris has even been completely rolled out. There are many who are waiting for a true Premium Economy which will make some happy, but will drive others farther to the back of the bus.
I have no problem with providing those who pay more with more and better service; however, at the same time United has chosen to make everyone else miserable in getting them (safely- I agree) from point A to point B. United has managed to disappoint huge numbers of elites at whatever level by offering less and demanding more while disappointing even the casual flyer. There is even some indication that basic economy is not all that attractive or financially productive. WN has mostly better pitch, fewer fees, and has the reputation of respecting even passengers flying on the lowest fares.
I propose that the good will being generated by the 747-400 retirement is a sign to United that there is a great deal of loyalty and support out there just waiting to be given a reason to be loyal and supportive. Will United understand this?
When will United learn that it cannot afford to alienate any paying customer?
Oct 20, 2017, 10:14 am
#81
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Oct 20, 2017, 10:46 am
#82
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UA has been working to "hollow out" the ranks of elites for years.
Their stinginess for upgrades (ToD) basically means that unless you're a GS, your upgrade percentage has plunged, even as a 1K. So I do think for a lot of people who would otherwise focus their travel exclusively on UA to keep/maximize status, are looking elsewhere, whether its on price/schedule/product.
Their stinginess for upgrades (ToD) basically means that unless you're a GS, your upgrade percentage has plunged, even as a 1K. So I do think for a lot of people who would otherwise focus their travel exclusively on UA to keep/maximize status, are looking elsewhere, whether its on price/schedule/product.
Oct 20, 2017, 11:31 am
#83
Join Date: Feb 2002
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Reading the transcript the comp very curious to see AA results next week.
Delta (having fortress hubs) just doesn't play with Spirit the way AA and UA do. Yes there is DTW...long fought off.
Sounds like Spirit tanked fares just after its earnings call last quarter - UA claims they reduced the headline fares 90%.
Kirby said it was the most impact in Chicago. Basically, to defend the hubs from the ULCC (Spirit) price change, they lower fares (i.e. Chicago - FLL), and offer enough seats at those fares to keep Spirit diluted. But that means fewer seats left to sell to high yield connections.
Is the defend the hub pricing model against smaller lower priced airlines right? Don't know enough to make a call, but AA and UA do it regularly and airlines have over the years like clockwork. And it's how DL fought off AirTran / Southwest.
Seems some of the drag is dealing with this price pressure and crowding out, rather than HVFs fleeing over frequent flier programs.
I'd ascribe about 1% of the yield drag to Dao and sundry customer perception issues. Not immaterial, but not the whole picture here. Changing the frequent flier program, enhancing the product, all nice things, but aren't going to get around the free market of a really low cost carrier playing an old fashion fare war in the largest metros, which also happens to be where UA deploys most of its capacity (rather than protected ones like ATL, MSP, DTW, SLC). How long it lasts hard to say - but the industry people saying airlines are untouchable now thanks to consolidation are in for a wake up call.
Delta (having fortress hubs) just doesn't play with Spirit the way AA and UA do. Yes there is DTW...long fought off.
Sounds like Spirit tanked fares just after its earnings call last quarter - UA claims they reduced the headline fares 90%.
Kirby said it was the most impact in Chicago. Basically, to defend the hubs from the ULCC (Spirit) price change, they lower fares (i.e. Chicago - FLL), and offer enough seats at those fares to keep Spirit diluted. But that means fewer seats left to sell to high yield connections.
Is the defend the hub pricing model against smaller lower priced airlines right? Don't know enough to make a call, but AA and UA do it regularly and airlines have over the years like clockwork. And it's how DL fought off AirTran / Southwest.
Seems some of the drag is dealing with this price pressure and crowding out, rather than HVFs fleeing over frequent flier programs.
I'd ascribe about 1% of the yield drag to Dao and sundry customer perception issues. Not immaterial, but not the whole picture here. Changing the frequent flier program, enhancing the product, all nice things, but aren't going to get around the free market of a really low cost carrier playing an old fashion fare war in the largest metros, which also happens to be where UA deploys most of its capacity (rather than protected ones like ATL, MSP, DTW, SLC). How long it lasts hard to say - but the industry people saying airlines are untouchable now thanks to consolidation are in for a wake up call.
Last edited by cerealmarketer; Oct 20, 2017 at 11:48 am
Oct 20, 2017, 11:31 am
#84
Join Date: Dec 2002
Location: SFO
Posts: 3,942
The stock is tumbling!
https://www.nytimes.com/reuters/2017...al-stocks.html
https://www.nytimes.com/reuters/2017...al-stocks.html
Who cares. Wall Street didn't. UAL beat expectations.
Hmmm, last I checked Delta has different hubs, fly different planes, a lot of different routes - is a lot bigger.
The thread title was about an announcement of UAL Q3 earnings - not a comparison to a completely different airline.
UA is flush with cash - Only FT would complain about $670 million in a 3 month period. They look to me like they are thriving just fine.
Hmmm, last I checked Delta has different hubs, fly different planes, a lot of different routes - is a lot bigger.
The thread title was about an announcement of UAL Q3 earnings - not a comparison to a completely different airline.
UA is flush with cash - Only FT would complain about $670 million in a 3 month period. They look to me like they are thriving just fine.
Last edited by WineCountryUA; Oct 20, 2017 at 1:18 pm Reason: removed unneeded comment
Oct 20, 2017, 11:57 am
#85
Join Date: Apr 2004
Location: Washington, DC
Posts: 1,309
this was written the night before the call. The call is what really got the stock tumbling...
Last edited by WineCountryUA; Oct 20, 2017 at 1:18 pm Reason: quote updated reflecy Moderator edit
Oct 20, 2017, 12:17 pm
#86
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I have no problem with providing those who pay more with more and better service; however, at the same time United has chosen to make everyone else miserable... United has managed to disappoint huge numbers of elites at whatever level by offering less and demanding more while disappointing even the casual flyer. There is even some indication that basic economy is not all that attractive or financially productive...
When will United learn that it cannot afford to alienate any paying customer?
When will United learn that it cannot afford to alienate any paying customer?
United looked at the customer pool basically the way 19th century fishing fleets looked at cod stocks off the Grand Banks. Today both know better than to treat their quarry as endless abusable, and inexhaustible. But a deep-programmed cultural reflex takes a long time to change, even when it blows up in UA's face, as BE has done...
Originally Posted by cerealmarketer
I'd ascribe about 1% of the yield drag to Dao and sundry customer perception issues.
Oct 20, 2017, 12:34 pm
#87
Formerly known as caveruner17
Join Date: Feb 2012
Location: ORD
Posts: 432
Or don't ensure a large E+ Cabin. Make E+ an actual Y+ product. Having recently seen what AC and LH have for their Y+ is pretty damn nice. Why does United need need 102 E+ seats on a 777? I'd guess most of those are "upgrades" given for free, rather than paid for upgrades.
Oct 20, 2017, 12:44 pm
#88
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Oct 20, 2017, 12:49 pm
#89
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Conceivably more in Asia, where the Dao thing got huge press and made UA look like it practiced race-based abuse.
Oct 20, 2017, 1:13 pm
#90
Join Date: Apr 2004
Location: Washington, DC
Posts: 1,309
... and....
... I was (as you can see) ready to jump to their defense. Then I listened to the call.
I believe in United and know that it can be great. I'm just kind of discouraged by what's going on. There is still hope, and everything is there to make it a great company (and I know a lot of people there who DO want it to be great). That said, I'm just worried that new management has squandered a lot of the goodwill they had when they started. There's still a chance to do really well, but they need to do it soon. I really hope they do.
I believe in United and know that it can be great. I'm just kind of discouraged by what's going on. There is still hope, and everything is there to make it a great company (and I know a lot of people there who DO want it to be great). That said, I'm just worried that new management has squandered a lot of the goodwill they had when they started. There's still a chance to do really well, but they need to do it soon. I really hope they do.