ryman554

Because investors, whether you like it or not, own the company. Customers do not. CEO has a fiduciary duty to do the right thing for their investors. Not so for their customers. If the CEO feels that the ROI of additional hardware is not good....

That being said, for the long term is sure feels like when companies place emphasis on:
1. Employees/PPE first
2. Customers second
Then
3. Stock price usually follows and everybody wins.

TheDesigner

As the CEO of a global company that deals with a "difficult" board I can say without a doubt this is spot on - with one caveat - ego.... Folks like Oscar don't need more money - it's not what drives them. On the surface it's easy to assume that compensation is what drives decision making at companies like UA - IME that's not really what is going on....

Kacee

The focus on driving short term stock price is often harmful to the company in the long term.

JHake10

I flew PHL-SFO a few months ago (pretty sure it an A320, maybe an A319) that has the old gray looking recliner seats and no power. It did have WiFi and PDE though. Regardless this is the problem! So much inconsistency.

JBord

While your statement is true, I don't think this is what motivates many CEO's to take the actions they do. Many see "fiduciary duty" as making sure what they do doesn't land them in jail, and that's as far as it goes (again, my opinion, and no offense meant to the many high-integrity C-suite folks I've worked with over the years ). When stock price goes up, those huge grants or options are worth more to the CEO...that's the driver.

Good point. I agree ego plays a large part, especially later in a career for those that start thinking about their legacy with a company. But I think it's a mix of ego and comp.

No question about it. It's one of the most frustrating and demoralizing things for those employees of a large corporation that figure out why CEO's do what they do. And I qualify as one of those people! When I started, the company wasn't public, and the CEO had been in charge for about 20 years. Then an IPO in the late 90's and a new CEO every 3-5 years, even while the stock has been soared and the company is by most measures successful on a quarter to quarter basis.

schley

The reason that the executive compensation package contains incentives tied to the stock price is because it is aligned with their objective as CEO, if the stock price is high the company is healthy (in theory, or have good accountants) and shareholders benefit. So the alignment of incentives are why it is very common, in addition to getting around any executive compensation limits for tax purposes.

Kacee

Yes, that's the mantra that's recited to justify the obscene executive compensation packages and the relentless drive to please the analysts. The reality is more complex, and the truth is the system is horribly broken.

Hipplewm

I asked about this in the thread about updates and some guys said they are slated for some of the 737's. Will be nice to have those FC seats where the bottom slides forward, hella comfortable compared to the current offerings

seenitall

Buying back one's own stock only makes sense when management has no good ideas for investments that would return more than what the stock is currently returning. That is, it is an admission of management's inability to improve from the present.

entropy

and now there's word that they're looking at buying back ExpressJet after they sold it off years ago to pad their coffers
https://seekingalpha.com/news/331729...=45#email_link

bocastephen

Bingo - and a very sad reflection on what is wrong with corporate America. As a shareholder, I expect the stock price to increase in the long term due to great strategic decisions, improved market share, more (happy) customers, and growing the business organically. I am not interested in short term price bumps from artificial manipulation due to maneuvers like stock buy-backs and dividend bumps against declining free cash flows.

Our culture needs to change - Wall Street types and their minions need to be pushed to the back burner. Current shareholders offer no value - once an IPO is done and the money is raised, investors need to shut up and sit in the back row and go along for the ride. If they don't like how the company is run, they have two options - sell their shares, or coordinate a movement against current leadership to force change. They are not in line to be coddled and prioritized.

Since the merger, and to present day, United's leadership has done very little to increase the value proposition of the brand - Polaris was botched from the get-go and has suffered from rollbacks, domestic premium catering was wrecked, inflight service has been slashed, and the focus on density over comfort is driving customers to other options. Perhaps one bright spot may be the improving lounge situation, but that's been a spotty and inconsistent roll out as well and appears to be more of a promotion than an actual product change.

What United management needs to focus on is customers, not shareholders, not analysts - customers. Customers and employees and vendors - no one else matters nearly as much. We need consistency, clear and open communication, and realistic product improvements that stick around. There are so many places this money could be spent, I couldn't even begin to count them - but buying back shares? It's not one of them, not even close.

SFO 1K

No it’s called updating a fleet while operating an airline. Suggest you follow the fleet update thread to stay current.

United Airlines Fleet Updates [2017 Edition]

see also
https://sites.google.com/site/unitedfleetsite/

schley

Not entirely true, that is just one reason. If you buyback your shares the earnings per share is increased as the net income is spread over less shares. This makes the stock look more appealing for everyone likes earnings. Thus it is a manipulation of sorts for that purpose, although if you have a strategic announcement or some large pivot to announce soon, that isn't public knowledge it would also make sense to buy back your shares before this in house revelation is shared and the stock jumps afterwards. Not saying that will happen, but it is a reason. Like insider trading of the BOD's, they know xxx announcement will be met with an increase in the stock price, so they buy it back before hand, the company does not individuals on the BOD, but they make the decision.

I don't know if UA is under or over valued, but buying back your stock when money is cheap as it still most definitely is is a gamble of sorts, for you have the service whatever debt was created in buying back the shares (I don't believe UA has this cash laying around). The debt also has the advantage of helping reduce tax liability for the company in servicing the debt (interest on the debt payments are deductible ).

spin88

We don't have to look much further than Jeff/Oscer's reign from 2011-2017 to see this in the real world. post 2011 United focused on trying to wring more profitability out of existing assets by cutting costs. in 2011 they were the world's largest airline, with the best located hubs, and by far the largest share of corporate accounts. They also had a fleet that was the best around, with at the time the most up-to date J product of any US airline (all lie flat), a a reputation towards elites (UA GS/1K) and the general public (CO) which was good. The future looked bright.

Now after 8 years of not investing in the business, and cutting both product quality and CS, and a relentless focus on cost cutting what has UA become? Sorry, but borrowing money to buy back stock at the top of a bubble is not a good move.... It smacks of desperation as United's stock (due to bad revenue metrics and projections) under-performs.

SFO 1K

I don't have a dog in this debate with regard to stock, but it occurs to me that in general, we see things with only one Point of View...
In the last five or so years I can off the top of my head think of:
- some new United Club locations (BOS, SAN, ORD B6, ORD F)
- most UC locations being refreshed with new furniture
- new IAH Terminal B and C North
- new Boarding Area E at SFO
- investment in new aircraft (739, 773, 787) and new used aircraft (Airbus)
- design and delivery of new domestic F cabin completed on Airbus fleet and continuing into 73G fleet
- design and initial delivery of new Polaris hard product
- design and delivery of new service ware for Polaris soft product
- continuous improvement in a leading smartphone app

Sure there's plenty to complain about, but it isn't like the company hasn't spent money on significant capital projects and several expense items as well.