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UA Q4/Full Year 2017 Results/Conference Call 23 Jan 2018

UA Q4/Full Year 2017 Results/Conference Call 23 Jan 2018

Old Jan 26, 18, 1:24 pm
  #76  
 
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And Bombardier just won its appeal of the 292% tariff imposed by the US Government, what better time to order!
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Old Jan 26, 18, 1:51 pm
  #77  
 
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Originally Posted by LarryJ View Post
We have the CS100 and CS300 payrates in the current contract. CS100 is the same as E190/E195. The CS300 payrate is the same as the A319 and 737-700. (That's what the 'paybanding' means) There's also a payrate for the CRJ900 which is the lowest payrate in the current contract.

If they added the CS100 or E190/E195 the current SCOPE would allow them to add additional 70/76-seaters operated by regional airlines. They could add an unlimited number of 70/76-seat airplanes as long as United pilots flew them. We have a rate for the CRJ-900. The similarly-sized E170/175 is not covered but the procedure for adding a fleet that isn't listed is covered. The procedure allows for the process to be completed within 180 days included binding arbitration, if necessary, and specifically says that it will not prevent the company from introducing the new aircraft before an agreement is reached. They can introduce the new aircraft paying no less than the lowest existing rate which is the CRJ-900 rate. Obviously, they don't want to pay us that rate to fly those airplanes.

Delta has the CS100 on order and their payrate is 18%-19%, depending on longevity, HIGHER than the rate in the United pilot agreement. UAL could put them online ASAP and operate then at a nearly 20% discount to DAL on the pilot rates.


He hasn't given specifics. One can only speculate that he wants to be able to fly more 70/76-seaters at regional airlines than the current SCOPE allows.
thanks, all very interesting, so it all is in UA's court at this point, and I had understood UA's pay rates were lower. Hopefully they add the c100/c300, both far nicer A/C than the junky -900s they are so obsessed over.

Originally Posted by worldtrav View Post
And Bombardier just won its appeal of the 292% tariff imposed by the US Government, what better time to order!
The Trump/Boeing case was a ridiculous joke to begin with, and I would note that Trump/Boeing lost UNANIMOUSLY. When actual judges looked at Boeing's ridiculous arguments they did not fly. Bombardier wins big over Boeing in trade dispute - Jan. 26, 2018

So taking stock, Boeing made a bunch of ridiculous arguments, which the Trump Admin followed, which caused Airbus to Buy the c100/c300 line, making them a fearsome competitor, putting Boeing in a weaker position. At some point Boeing is going to have to start making good A/C that passengers prefer, rather than playing politics all the time.
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Old Jan 26, 18, 2:29 pm
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Originally Posted by spin88 View Post
thanks, all very interesting, so it all is in UA's court at this point, and I had understood UA's pay rates were lower. Hopefully they add the c100/c300, both far nicer A/C than the junky -900s they are so obsessed over.
I'm curious. From a passenger perspective, would you consider the 199-seat DL 757 "junky"? Ignore the AVOD angle for a second. Judge it based on layout, space, and comfort.
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Old Jan 26, 18, 2:48 pm
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Originally Posted by minnyfly View Post
I'm curious. From a passenger perspective, would you consider the 199-seat DL 757 "junky"? Ignore the AVOD angle for a second. Judge it based on layout, space, and comfort.
Well, I prefer it to Delta's 739, because DL's slimlav layout on that airplane is terrible. But the midlav on the 757 sits smack in the middle of C+, so that's no picnic, either. I actually prefer UA's 739 configuration to both.
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Old Jan 26, 18, 3:46 pm
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Originally Posted by worldtrav View Post
I'll take the E170/175 over a freaking 737 any day of the week.
Amen!
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Old Jan 26, 18, 4:25 pm
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Originally Posted by minnyfly View Post
I'm curious. From a passenger perspective, would you consider the 199-seat DL 757 "junky"? Ignore the AVOD angle for a second. Judge it based on layout, space, and comfort.
Well the AVOD is a material difference. Delta wins, United doing it's ULCC act. But hey, I much prefer the 757, even in DL's rather strange 20 F configuration to any 739. This said, I much prefer the A321 to either. In AA or DL or VX configuration its a much, much nicer plane. Width is nice and the overhead bins don't take up so much space.

The 737-900 is a total piece of junk.
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Old Jan 26, 18, 5:28 pm
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Originally Posted by worldtrav View Post
I'll take the E170/175 over a freaking 737 any day of the week.
I would too however your chances of getting to your destination during any sort of weather/ATC are significantly higher on that 737, IMO.
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Old Jan 27, 18, 3:09 pm
  #83  
 
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United Expansion Hits Airline Shares

This from WSJ January 25, 2018:
https://www.wsj.com/articles/airline...ans-1516820046

Per FT Rules on external links
Jan 24, 2018
Airline shares tumbled on Wednesday as investors fretted that United Continental Holdings Inc.’s expansion plans threatened profit margins and could spark a price war if other carriers follow suit.
WSJ has a paywall

Last edited by WineCountryUA; Jan 27, 18 at 3:54 pm Reason: added content per FT Rules; add to existing thread covering the topic
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Old Jan 28, 18, 7:25 am
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Originally Posted by goodeats21 View Post


I didn't get to listen to the entire call, but what I heard about the 50 seaters and "small" markets was a hoot.

They just decimated my DAY service, removing all 2 cabin planes that were standard on ORD, and had been increasing to other hubs. All 50 seaters now. And AA and Delta both have multiple mainline ops every day. Hardly competetive.

I started flying out of CVG to avoid the CR2s, and now my costs have gone down as I am seeing lower fares.
I fear they are going to be disappointed by their plan to have the Devil's Chariot be the solution to their yield issues.
I will try to listen to the entire call later tonight to see if I missed anything, though.

I was was also struck by "natural share" discussion, which sounded a lot like "we don't need to compete for business".
Originally Posted by minnyfly View Post
...
DAY again. For 2017, both UA and DL (even mainline) are shrinking at DAY. AA is the largest and is up slightly. Much of the declines at DAY are undoubtedly due to competition returning to CVG, lowering fares there, and reversing CVG leakage to DAY.

UA still has 2-class RJs to ORD at comparable levels going back quite a few years.

AA has only two mainline flights, and DL has only four mainline flights, both going to one hub each in directions UA doesn't compete with them on.

UA's traffic decline predates the inclusion of CRJs replacing E145s.

UA recently announced a return to IAH, something I mentioned previously was their biggest hole at DAY.
...
Originally Posted by goodeats21 View Post
Just because you keep saying it, it does not make it true...and I am tired of arguing with you about it. I have lived it.
DAY<->ORD on a 2 cabin plane seems to be down to one turn a week...Tuesday afternoons. Everything else seems to be 1 cabin.
That is a drastic reduction in 2-cabin service over the past several years.
And the other routes which used to see 2 cabin -DEN on most days, and the occasional IAD, are all 50 seaters now.

mduell - do you have time to run the schedule on this? I don't know of any other way to prove the obvious.

Oh, and sure, it is nice to see DAY<->IAH be added back this summer...but we are looking at an almost 3 hour flight on a 50 seater, so not like this is a groundbreaking.
Originally Posted by mduell View Post
UAL flights from KDAY:

Code:
year   one_cabin   two_cabin
------+-----------+-----------
2016   2757   1575
2017   1915   1986
2018   3270   1376
Well the good news is frequency is going up...
Originally Posted by minnyfly View Post
I'm not saying because I'm saying it. I'm saying it because it's what the BTS and Dayton Airport stats tell us. I'd be on board with you if that's what the stats show. UA hasn't had drastically more 2-class service on ORD-DAY for many years. And it's ironic that mduell shows you that 2017 had more 2-class service than 2016. ORD-DAY has been a mix of 2-class and 50-seaters for over a decade. Mainline left in 2009, and the RJ mix has been similar for even longer.

IAD-DAY had some 2-class service many years ago, but that was also limited. The overall DAY mix has been in the 50/50 to majority 50-seater range for a long time. The mix has been more favorable to 2-class lately, although overall traffic has been in decline for years. But that has been true for most carriers at DAY. Interestingly mainline traffic has also dropped over the past five years with DL and AA. It'as not a UA thing. It's primarily a DAY/CVG thing. Even if UA gets more 2-class RJs, I wouldn't expect a dramatic increase in service to DAY. That ship appears to be sailing down I-75. Maybe the new focus on small markets will stem the tide in the next few years, but don't expect mainline to suddenly dominate.
You have denied UA had more 2 cabin service in previous years. mduell was kind enough to post the data that proves you are not correct.
If you have DATA showing something different, post it. Otherwise, you have lost credibility on this.

Overall, Kirby was very specific about the connectivity issue being key to increasing yields - that United needs to compete for small market share when there is competition.
I maintain that throwing CR2s against 2-cabin RJs and Mainline is not a winning strategy.
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Old Jan 28, 18, 9:12 am
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Originally Posted by goodeats21 View Post
You have denied UA had more 2 cabin service in previous years. mduell was kind enough to post the data that proves you are not correct.
If you have DATA showing something different, post it. Otherwise, you have lost credibility on this.

Overall, Kirby was very specific about the connectivity issue being key to increasing yields - that United needs to compete for small market share when there is competition.
I maintain that throwing CR2s against 2-cabin RJs and Mainline is not a winning strategy.
I am think part of the basis for his strategy is these smaller markets have few frequencies on DL / AA so there are times of the day as well as onward connections that just donít have an alternative.

For example if you want to go ILM-SAN and want a travel time under 8 hours...

Theres

ILM-ATL 6am
ILM-IAD 10:30am
ILM-CLT 2:20pm
ILM-ATL 4:55pm
ILM-ATL 6:20pm

So UA slotted in during an 8 hour gap in the schedule. The prime time slots are taken but if you happen to be someone who doesnít want the ultra early wake up UA is your choice.

Then letís look at long haul like ILM-GRU

If you want just one stop thereís

​​​​​​​6:05pm ATL - 2 hr layover
7:55pm IAD - 1hr layover

Riskier connection here but it gives more time working in ILM and shows up higher in search results (shorter ttrip). More important - only 2 airlines not 3 duking it out.

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Bismarck - NYC

5am DL 2 cabin
6:20 UA single
6:55am DL 2 cabin
10:55 DL 2 cabin
12:55 UA 1 cabin
1:20 DL 1 cabin
​​​​​​​3:20 AA 2 cabin
5:39 DL 2 cabin

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​​Not great on the early morning - fills a hole during the midday when DL is running single cabin.

​​​​​​​Will it achieve his numbers? No idea - clearly we all would rather see 2 cabin on every route - but itís not as cut and dry as throwing single cabin planes on saturated routes like ORD-NYC.
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Old Jan 28, 18, 9:22 am
  #86  
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Originally Posted by minnyfly View Post
For kicks let's say it a different way isolated on the revenue side of the equation. For the average UA flyer at the average UA stage length (1,460 mi), it means UA flyers paid $221.92 instead of $242.50 to travel from point A to point B, and they did it more reliably to boot. UA is a good deal.
Another way of interpreting the fare data is that a hundred million passengers were willing to pay, on average, $20 more to fly Delta than to fly United. What is it about the Delta vs. UA experience? What is UA doing to improve wage (specifically) and total cost productivity to be profitable with that headwind? These would be uncomfortable questions for UA execs.
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Old Jan 28, 18, 12:59 pm
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Originally Posted by minnyfly View Post
For kicks let's say it a different way isolated on the revenue side of the equation. For the average UA flyer at the average UA stage length (1,460 mi), it means UA flyers paid $221.92 instead of $242.50 to travel from point A to point B, and they did it more reliably to boot. UA is a good deal.
UA has to discount in markets where they go head to head with LCC and DL to fill their planes, that is the whole reason for BE fares. Also, where to you get that UA is more reliable than DL?
  1. lower OTA
  2. greater chance of IDB
  3. Higher bag mishandling rate
UA can't 'earn' a revenue premium domestically because they don't have the assets and product quality to compete against DL head to head. There is still no integrated FA contract which hobbles their costs and now it appears that the c-suite wants to use the scope clause as a wedge issue again for pilot wage concessions to deal with their RJ problem instead of just ordering a decent set of lift to compete.

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Old Jan 28, 18, 1:58 pm
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For me it’s very simple if the flight is with a CR2 I am not flying. Either other airline or other time slot or connection.
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Old Jan 28, 18, 2:17 pm
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I read somewhere that UA admitted they were losing money with Basic Economy and that they were going to change it up a bit, including giving passengers the benefit of paying for seat assignments/upgrades. Was this mentioned in this conference call or did I get this info from somewhere else?
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Old Jan 28, 18, 2:19 pm
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Originally Posted by goodeats21 View Post
You have denied UA had more 2 cabin service in previous years. mduell was kind enough to post the data that proves you are not correct.
If you have DATA showing something different, post it. Otherwise, you have lost credibility on this.

Overall, Kirby was very specific about the connectivity issue being key to increasing yields - that United needs to compete for small market share when there is competition.
I maintain that throwing CR2s against 2-cabin RJs and Mainline is not a winning strategy.
I never said there has never been more 2-class service at DAY. Anyone who goes back can see I never said that. I'd appreciate it if you don't misconstrue statements. I asked you if you had any evidence multiple times after you made the first claims that UA has been "getting their clock cleaned" on ORD-DAY, yet your answer is essentially "trust me because I commonly fly from DAY". The burden of truth is on you. You made the claims. I do have some evidence to either support or deny your evidence when we see it. But not before.

Let's revisit a December post of yours, where you claim UA is ceding market share. Now again you don't have evidence to back it up, and you make inference that it goes beyond the IAD/EWR-DAY specifically talked about (ZW doesn't even fly EWR-DAY). So as a data point of interest, let's take all of DAY and see what UA's share of traffic has been there since 2012, the first year of fully combined UA/CO ops (starting with that year): 17.4%, 17.9%, 17.4%, 18.3%, 17.6%, 17.0%. mduell's table indicates about a 10% increase in capacity this year, so they could have their largest share there this year since after the merger, meaning UA is planning to compete for more DAY market share. I guess we will find out as the year goes on whether your belief that it won't increase market share isn't a "winning strategy". Either way UA has had a very consistent market share at DAY in the past 6 years, providing evidence that the issue isn't UA for shrinking schedules, it's DAY demand as a whole. As a whole airlines are shrinking there.

Originally Posted by 3Cforme View Post
Another way of interpreting the fare data is that a hundred million passengers were willing to pay, on average, $20 more to fly Delta than to fly United. What is it about the Delta vs. UA experience? What is UA doing to improve wage (specifically) and total cost productivity to be profitable with that headwind? These would be uncomfortable questions for UA execs.
No, that would be a very incorrect interpretation. That assumes universal choice of carriers, which we know isn't true.

Ironically a lack of choice is a key factor in who pays more for the "privilege" of flying certain carriers. And a simple hypothetical question tells us that in a commodity market that the "experience" has little to do with it, unless we're talking about negative operational "experiences", in which case DL has had many troubles lately. Let's ask a hypothetical question in a simple market. Let's say DL raises their prices to be $20 over a directly competing carrier (a generic UA), in this case a fixed $240 instead of a fixed $220. The demand in this certain market at a fixed $220 price level is a combined 80% load factor, meaning there is excess capacity available. In this example, the exact load factor ratio between the two at the $220 price level doesn't matter. After DL universally raises their price to $240, do you believe their load factor would hold constant and their PRASM would increase by that 9% yield increase, holding every else constant, including the same basic service (transportation) and product that DL offers now? Or is it conceivable that the competing airline would gain load factor and possibly PRASM?

P.S. UA's is doing remarkably well on the cost side versus DL and AA. Not sure how they're doing it, but the difference was large in Q4.
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