United Airlines Reports Second-Quarter 2018 Performance & Earnings Call 18 July 2018
Jul 16, 2018, 6:22 pm
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United Airlines Reports Second-Quarter 2018 Performance & Earnings Call 18 July 2018
United Airlines Reports Second-Quarter 2018 Performance
CHICAGO, July 17, 2018
United Airlines (UAL) today announced its second-quarter 2018 financial results.
CHICAGO, July 17, 2018
United Airlines (UAL) today announced its second-quarter 2018 financial results.
- UAL reported second-quarter net income of $684 million, diluted earnings per share of $2.48, pre-tax earnings of $857 million and pre-tax margin of 8.0 percent.
- Excluding special charges and mark-to-market adjustments, UAL reported second-quarter net income of $889 million, diluted earnings per share of $3.23, pre-tax earnings of $1.1 billion and pre-tax margin of 10.4 percent.
- Ranked first among largest competitors in on-time departures in the quarter.
- UAL repurchased $407 million of its common shares in the second quarter.
- Consolidated passenger revenue per available seat mile (PRASM) increased 3.0 percent year-over-year.
- Consolidated total revenue per available seat mile (TRASM) increased 2.8 percent year-over-year.
- Consolidated unit cost per available seat mile (CASM) increased 7.1 percent year-over-year.
- Consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.4 percent year-over-year.
- UAL now expects full-year 2018 diluted earnings per share, excluding special charges and mark-to-market adjustments, to be $7.25 to $8.751.
Second-Quarter Highlights
Operations and Employees
Operations and Employees
- Completed the best second-quarter on-time departure performance in United's history.
- Received "Best-of-the-Best" Award from the National LGBT Chamber of Commerce and National Business Inclusion Consortium for commitment to diversity and inclusion across all communities.
- Announced a total of $8 million in grants to benefit organizations in each of its domestic hub communities.
- Became the first carrier to achieve certification through the new Audubon International Green Hospitality Program for the airline's United Club location in Terminal 7 of Los Angeles International Airport.
Customer Experience
- Expanded personal device entertainment option to all aircraft with DIRECTV live streaming for purchase, providing at least one free entertainment option on all Wi-Fi equipped aircraft (which is any aircraft with more than 70 seats).
- Opened three new United Polaris lounges located in San Francisco International Airport, Newark Liberty International Airport and Houston's George Bush Intercontinental Airport.
- Announced a new relationship with The Private Suite, offering the airline's customers access to a newly built, private terminal at Los Angeles International Airport.
- Introduced the new United Explorer Card which offers additional benefits, travel credits and discounts.
Network and Fleet
- Launched service from Newark/New York to two new international destinations: Reykjavik, Iceland, and Porto, Portugal.
- Announced the return of seasonal service to 25 destinations, including, among others: Athens, Greece; Glasgow, Scotland; Madrid and Barcelona, Spain; Rome and Venice, Italy; and Hamburg, Germany.
- Announced schedule expansion at East Coast hubs in Newark/New York and Washington-Dulles to offer more nonstop flights to destinations popular with New York-area customers while reallocating largely connecting passenger flights to Washington-Dulles.
- Took delivery of one Boeing 777-300ER aircraft and six Boeing 737 MAX 9 aircraft.
- Became North American launch customer of the Boeing 737 MAX 9 aircraft, which took its first flight on June 7 from Houston's George Bush Intercontinental Airport to Orlando International Airport in Florida.
Links
Q2 presentation link
Q2 call transcript link
Q2 webcast recording link ... mp3
Quarterly 10-K
Investor Update -- 17 July 2018
Past reports
UA Announces Q1 2018 Financial Results 17 April / Conference Call 18 April
UA Announces Q2 2017 Financial Results 18 July / Conference Call 19 July
Last edited by WineCountryUA; Jul 19, 2018 at 1:58 am
Jul 17, 2018, 2:34 pm
#2
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UA Announces Q2 2018 Financial Results 17 July / Conference Call 18 July
CHICAGO, July 17, 2018 /PRNewswire/ -- United Airlines (UAL) today announced its second-quarter 2018 financial results.
https://hub.united.com/united-airlin...587651625.html
10:30am est Conf call can be heard here: https://services.choruscall.com/link...8BLsNWF5d.html
- UAL reported second-quarter net income of $684 million, diluted earnings per share of $2.48, pre-tax earnings of $857 million and pre-tax margin of 8.0 percent.
- Excluding special charges and mark-to-market adjustments, UAL reported second-quarter net income of $889 million, diluted earnings per share of $3.23, pre-tax earnings of $1.1 billion and pre-tax margin of 10.4 percent.
- Ranked first among largest competitors in on-time departures in the quarter.
- UAL repurchased $407 million of its common shares in the second quarter.
- Consolidated passenger revenue per available seat mile (PRASM) increased 3.0 percent year-over-year.
- Consolidated total revenue per available seat mile (TRASM) increased 2.8 percent year-over-year.
- Consolidated unit cost per available seat mile (CASM) increased 7.1 percent year-over-year.
- Consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.4 percent year-over-year.
- UAL now expects full-year 2018 diluted earnings per share, excluding special charges and mark-to-market adjustments, to be $7.25 to $8.751.
https://hub.united.com/united-airlin...587651625.html
10:30am est Conf call can be heard here: https://services.choruscall.com/link...8BLsNWF5d.html
Jul 17, 2018, 3:07 pm
#3
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Earnings Call
UAL will hold a conference call to discuss second-quarter 2018 financial results and its financial and operational outlook for the third quarter and full year of 2018 on Wednesday, July 18, at 9:30 a.m. Central Time /10:30 a.m. Eastern Time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
UAL will hold a conference call to discuss second-quarter 2018 financial results and its financial and operational outlook for the third quarter and full year of 2018 on Wednesday, July 18, at 9:30 a.m. Central Time /10:30 a.m. Eastern Time. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
Jul 17, 2018, 3:40 pm
#4
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Consensus EPS estimate of $3.07, which UA beat at $3.23 ($2.48 net) and the company raised its full-year EPS guidance a quarter to $7.50 to 8.75.
Guidance is +4-6% PRASM for 3Q.
No significant fleet plan changes, mainline status quo, but it appears the company will take 3 fewer CR2s than originally planned (37 vs. 40 by YE), and will add 8 more ERJ-145 (total of 9).
Guidance is +4-6% PRASM for 3Q.
No significant fleet plan changes, mainline status quo, but it appears the company will take 3 fewer CR2s than originally planned (37 vs. 40 by YE), and will add 8 more ERJ-145 (total of 9).
Jul 17, 2018, 3:59 pm
#5
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Considering the spike in fuel prices, this was a very solid quarter for United. Solid PRASM performance and the best on time second quarter in carrier history. If fuel prices were to fall back down a bit, all of these temporary additions of the dreaded 50 seaters might very well pay off. Even if fuel stays roughly where it is, they are showing some resiliency against what would have been potentially loss making several years ago. Now since United had such a good quarter, maybe they can roll back of the recent downgrades to domestic F meal service. Wishful thinking on my part.
I look forward to listening to tomorrow mornings earnings call.
I look forward to listening to tomorrow mornings earnings call.
Jul 17, 2018, 4:53 pm
#6
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I would add two figures that I don't see in the above posts. United's 2Q operating income was $1.161M, and its projected 3Q capacity/ASM bump is 4.5% to 5.5%.
First, IMHO on the "good" side, United is projecting a 4-6% PRASM increase on a 4.5-5.5% bump in ASM, which is better than what Delta is projecting a 3.5-5.5% growth (they don't say if this is TRASM or PRASM) on 3-4% higher capacity. If you take the mid-point of these numbers, and UA actually achieves them, it will be the first quarter in a long while that United actually will have bested Delta in revenue metrics when considering capacity.
Second, on the "comparison" side, Delta had $1.68B in Operating income (vs UA’s lower $1,161M), and a 4.4% PRASM increase on a 3.5% increase in ASM. United only had a 3% PRASM (2.8% TRASM) increase in unit revenues, on a slightly larger 4.3% increase in ASM. Once again Delta out-performed United, and not by a small amount. The difference is about an extra $120M in revenue that Delta got, and United did not get, this quarter. Given that Delta is already getting a fare premium over United, continued premium growth by Delta is noteworthy. IMHO this shows that United's "better" results are not the result of United doing better in relation to competitors (at least DL) but rather a raising tide impacts all boats...
Third, a few bits of information I found interesting from the DL call, which I pass on because I think they are useful to know:
- DL: “ we're seeing a domestic Net Promoter Score of 44%, up 3 points versus the prior year” Anyone want to guess if UA can say the same thing? (also curious what the DL international score is....) The projected scores I have seen for United have been more like a 10.... I remain of the view that United has to fix the underlying product/service issues and push up its NPS score to ever regain the ground that is lost from 2012 onward.
- DL: “We are committed to continuing to improve our products as well as our network footprint as we add A350s and reconfigure 777s with our four class product, including Delta One suites, Premium Select, and the industry's largest seats in coach on our 777 fleet” It is clear that Delta is going to start advertising its much better product in the face of UA (and AA) going with horrible tight configurations.
-DL: “[PE] is is generating an average fare premium of over 100% to a standard coach seat” I have no idea what United projects to get, but this number is higher than I would expect.
- DL reported that of its income, 88.3% ($9308M) was from ticket sales, 6.4% ($680M) was from FF redemption (which count as revenue) and 5.3% ($558M) was travel related (change fees, baggage, onboard sales). I have not notice this type of breakout by an airline before, and it gives an interesting indication of the % of "revenue" that comes from FF awards (note: FF miles are booked as a liability, and when they are redeemed it counts as revenue)
First, IMHO on the "good" side, United is projecting a 4-6% PRASM increase on a 4.5-5.5% bump in ASM, which is better than what Delta is projecting a 3.5-5.5% growth (they don't say if this is TRASM or PRASM) on 3-4% higher capacity. If you take the mid-point of these numbers, and UA actually achieves them, it will be the first quarter in a long while that United actually will have bested Delta in revenue metrics when considering capacity.
Second, on the "comparison" side, Delta had $1.68B in Operating income (vs UA’s lower $1,161M), and a 4.4% PRASM increase on a 3.5% increase in ASM. United only had a 3% PRASM (2.8% TRASM) increase in unit revenues, on a slightly larger 4.3% increase in ASM. Once again Delta out-performed United, and not by a small amount. The difference is about an extra $120M in revenue that Delta got, and United did not get, this quarter. Given that Delta is already getting a fare premium over United, continued premium growth by Delta is noteworthy. IMHO this shows that United's "better" results are not the result of United doing better in relation to competitors (at least DL) but rather a raising tide impacts all boats...
Third, a few bits of information I found interesting from the DL call, which I pass on because I think they are useful to know:
- DL: “ we're seeing a domestic Net Promoter Score of 44%, up 3 points versus the prior year” Anyone want to guess if UA can say the same thing? (also curious what the DL international score is....) The projected scores I have seen for United have been more like a 10.... I remain of the view that United has to fix the underlying product/service issues and push up its NPS score to ever regain the ground that is lost from 2012 onward.
- DL: “We are committed to continuing to improve our products as well as our network footprint as we add A350s and reconfigure 777s with our four class product, including Delta One suites, Premium Select, and the industry's largest seats in coach on our 777 fleet” It is clear that Delta is going to start advertising its much better product in the face of UA (and AA) going with horrible tight configurations.
-DL: “[PE] is is generating an average fare premium of over 100% to a standard coach seat” I have no idea what United projects to get, but this number is higher than I would expect.
- DL reported that of its income, 88.3% ($9308M) was from ticket sales, 6.4% ($680M) was from FF redemption (which count as revenue) and 5.3% ($558M) was travel related (change fees, baggage, onboard sales). I have not notice this type of breakout by an airline before, and it gives an interesting indication of the % of "revenue" that comes from FF awards (note: FF miles are booked as a liability, and when they are redeemed it counts as revenue)
Jul 17, 2018, 4:58 pm
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- DL: “ we're seeing a domestic Net Promoter Score of 44%, up 3 points versus the prior year” Anyone want to guess if UA can say the same thing? (also curious what the DL international score is....) The projected scores I have seen for United have been more like a 10.... I remain of the view that United has to fix the underlying product/service issues and push up its NPS score to ever regain the ground that is lost from 2012 onward.
Jul 17, 2018, 10:15 pm
#8
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I only mentioned it since its interesting that this quarter DL touted (1) how great its new seats are and how its 777 Y seats are the widest in the industry, and (2) how its NPS scores are up. In the ongoing debate about whether service/product quality matter or instead everyone just buys on price so United was savvy to cut its product/service and bank the cost cuts, that DL is saying what it is saying is relevant IMHO. This said, lets see, perhaps United will comment on how all of the "changes you will like" have create outside passenger happiness.
Jul 17, 2018, 10:33 pm
#9
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United - at least on every survey I have ever gotten - asks the "would you recommend" NPS type questions. United may not subscribe to one of the several companies that provide data (I don't think DL does either) but it clearly collects the 411. It was quoted in the 2013 WSJ piece on NPS as doing so, and relying upon it. The difference is that DL has mentioned improvements in its scores several times through the years, United, well its radio silence. That United has never said a peep about what its scores are post 2012, suggests they are not so hot... Its not meaningless, just not something UA wants to talk about since its (as you appear to agree) bad...
I only mentioned it since its interesting that this quarter DL touted (1) how great its new seats are and how its 777 Y seats are the widest in the industry, and (2) how its NPS scores are up. In the ongoing debate about whether service/product quality matter or instead everyone just buys on price so United was savvy to cut its product/service and bank the cost cuts, that DL is saying what it is saying is relevant IMHO. This said, lets see, perhaps United will comment on how all of the "changes you will like" have create outside passenger happiness.
I only mentioned it since its interesting that this quarter DL touted (1) how great its new seats are and how its 777 Y seats are the widest in the industry, and (2) how its NPS scores are up. In the ongoing debate about whether service/product quality matter or instead everyone just buys on price so United was savvy to cut its product/service and bank the cost cuts, that DL is saying what it is saying is relevant IMHO. This said, lets see, perhaps United will comment on how all of the "changes you will like" have create outside passenger happiness.
United has a better J class with Polaris, which although suffering delayed implementation, IMHO I prefer UA aircraft 777/787 predominance versus the vast DL 767 fleet.
This discussion will continue forever. Wishing you fair travels
Adam
Jul 17, 2018, 10:40 pm
#10
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Domestic is another story. Just booked AS (on a former VX 320) for SFO-WAS. UA offers a horrid economy product SFO-IAD, with no chance of 1K clearing RPU on the well timed flights.
Jul 17, 2018, 10:50 pm
#11
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I've been really disappointed with DL and ST international options from west coast. Find UA and *A options much better.
Domestic is another story. Just booked AS (on a former VX 320) for SFO-WAS. UA offers a horrid economy product SFO-IAD, with no chance of 1K clearing RPU on the well timed flights.
Domestic is another story. Just booked AS (on a former VX 320) for SFO-WAS. UA offers a horrid economy product SFO-IAD, with no chance of 1K clearing RPU on the well timed flights.
Adam
Jul 18, 2018, 1:01 am
#12
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I've been really disappointed with DL and ST international options from west coast. Find UA and *A options much better.
Domestic is another story. Just booked AS (on a former VX 320) for SFO-WAS. UA offers a horrid economy product SFO-IAD, with no chance of 1K clearing RPU on the well timed flights.
Domestic is another story. Just booked AS (on a former VX 320) for SFO-WAS. UA offers a horrid economy product SFO-IAD, with no chance of 1K clearing RPU on the well timed flights.
Jul 18, 2018, 8:06 am
#13
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We’ll see how the call goes, but the markets are responding very favorably to this result, certainly more so than DL. Spinning this quarter as anything other than a very strong showing from UA is not exactly credible.
Jul 18, 2018, 9:20 am
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(we typically ignore NPS for predictive modeling purposes due to the low R-Sq and low Gini/KS of this metric)
Jul 18, 2018, 9:25 am
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I only mentioned it since its interesting that this quarter DL touted (1) how great its new seats are and how its 777 Y seats are the widest in the industry, and (2) how its NPS scores are up. In the ongoing debate about whether service/product quality matter or instead everyone just buys on price so United was savvy to cut its product/service and bank the cost cuts, that DL is saying what it is saying is relevant IMHO. This said, lets see, perhaps United will comment on how all of the "changes you will like" have create outside passenger happiness.
UAL up about 8%, getting close to 52w high.
Last edited by WineCountryUA; Jul 18, 2018 at 2:16 pm Reason: discuss the issue, not the poster(s)