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UA Q4/Full Year 2018 Results/Conference Call 16 Jan 2019

UA Q4/Full Year 2018 Results/Conference Call 16 Jan 2019

Old Jan 16, 2019, 1:57 pm
  #16  
 
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Originally Posted by cesco.g
What is the "Gemini" referring to?
Gemini is the new revenue management system, which replaced the Orion system that was built at pre-merger United in the 90s. The main goal of Gemini was to better predict demand, especially at higher fare levels, and improve forecast error. Thus far, it would appear to be succeeding.
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Old Jan 16, 2019, 2:03 pm
  #17  
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They're finally catching up a bit relative to DL who have been just killing it year after year..

and AA is suffering a lot... (like the pax on their aircraft)...

Interesting to see the 77W orders, I'm sure they got a sweet deal on them.

They look all "go go " right now, I do have to think there's significant capacity that they'll cut once the recession hits.
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Old Jan 16, 2019, 5:14 pm
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Now that I've had a chance to read the transcript, a few more highlights:

- New app next week
- Capacity growth range remains 4-6% for the full year
- Domestic PRASM up 6% on 6.4% increase in capacity
- Gemini alone expected to add a point of PRASM improvement
- Company remains committed to the Basic Economy product as-is, not seeing a book-away factor
- CapEx exceeded 2018 targets because of opportunistic aircraft purchases
- No more monthly traffic releases (Mods rejoice!)
- A second wave of EWR to IAD capacity shifting is in the works, which likely means a few close-in EWR "connectivity" markets will lose service in favor of IAD, and EWR will have larger average gauge and greater frequency to key O&D destinations. I don't mind this trend.
- Systemwide, about 33 airplanes have been redeployed to different markets, resulting in approximately 50 points of margin improvement for those frames. LAX-SIN to SFO-SIN #2 was suggested as an example of this reallocation
- Premium Plus is capturing approximately 2x average fare of Y, exceeding expectations
- 757 retirements begin again this year with first three (3) of TCON fleet
- Retirement of oldest A320s will likely start in 2020, which coincides with delivery of newer replacements from China and Europe (reading between the lines)
- United has really reversed the Smisek-era strategy of reducing capacity on off-peak days to improve RASM; when that capacity was added back, RASM grew faster than peak days and contributed positively to systemwide RASM performance
- United has the largest exposure to the government shutdown with the IAD hub and significant government contract flying
- Much of the mainline growth is going to be replacing regional, allowing the freed-up regional capacity to be redeployed into "catchment" markets
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Old Jan 16, 2019, 6:07 pm
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- A second wave of EWR to IAD capacity shifting is in the works, which likely means a few close-in EWR "connectivity" markets will lose service in favor of IAD, and EWR will have larger average gauge and greater frequency to key O&D destinations. I don't mind this trend.
Dear goodness, no! One of the major benefits to living close to EWR is my ability to get pretty much anywhere my customers are domestically, nonstop.

Of my destinations, the one Im most concerned theyll move is CMH. I cant imagine having to go EWR-IAD-CMH. Major pain in the butt, that would be!
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Old Jan 16, 2019, 9:30 pm
  #20  
 
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they won't stop CMH EWR

The majority of the traffic on CMH EWR is just going to EWR. they won't cancel and move flights to Dulles where the majority of the traffic is going to EWR. It's just markets like ITH, BDL, etc, where the traffic was mostly flowing over EWR to destinations in Florida and the west coast. Markets that are mostly traffic going to EWR / NYC will remain at EWR. you won't have to go CMH IAD EWR

Originally Posted by dmurphynj


Dear goodness, no! One of the major benefits to living close to EWR is my ability to get pretty much anywhere my customers are domestically, nonstop.

Of my destinations, the one Im most concerned theyll move is CMH. I cant imagine having to go EWR-IAD-CMH. Major pain in the butt, that would be!
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Old Jan 16, 2019, 11:23 pm
  #21  
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Originally Posted by EWR764
Some interesting notes from the call:
- Atlantic economy class yield is softening
Doesn't surprise me a bit. UA's long haul Y product is increasingly not competitive.

Originally Posted by EWR764
Now that I've had a chance to read the transcript, a few more highlights:

- Premium Plus is capturing approximately 2x average fare of Y, exceeding expectations

- United has really reversed the Smisek-era strategy of reducing capacity on off-peak days to improve RASM; when that capacity was added back, RASM grew faster than peak days and contributed positively to systemwide RASM performance
{Concerning Premium Plus} I'm glad UA finally got on board and are offering it.

And kudos for management for dumping yet another bad Smisek-era idea.

Last edited by WineCountryUA; Jan 16, 2019 at 11:32 pm Reason: Discuss the issues, not the poster(s)
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Old Jan 17, 2019, 2:17 am
  #22  
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Originally Posted by dmurphynj


Dear goodness, no! One of the major benefits to living close to EWR is my ability to get pretty much anywhere my customers are domestically, nonstop.

Of my destinations, the one Im most concerned theyll move is CMH. I cant imagine having to go EWR-IAD-CMH. Major pain in the butt, that would be!
They are already reducing EWR frequency and capacity for DAY and CVG. I don't use CMH, so haven't been tracking it.

But DAY has gone from 2x daily to EWR, down to 1x daily....
And CVG has gone from almost exclusively 2-cabin RJs (E70s and E75s), to a 50% mix of 50 seaters now.

So you may not have to connect in IAD...but i doubt the schedule / equipment will remain as convenient.
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Old Jan 17, 2019, 2:21 am
  #23  
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Originally Posted by jasondc
The majority of the traffic on CMH EWR is just going to EWR. they won't cancel and move flights to Dulles where the majority of the traffic is going to EWR. It's just markets like ITH, BDL, etc, where the traffic was mostly flowing over EWR to destinations in Florida and the west coast. Markets that are mostly traffic going to EWR / NYC will remain at EWR. you won't have to go CMH IAD EWR
Is there some data about the passenger mix being mostly OD?

EWR has a lot of unique, Intl destinations that would certainly indicate a significant percentage of CMH<->EWR traffic (and DAY, CVG, and others) are connecting onward...
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Old Jan 17, 2019, 6:31 am
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Originally Posted by halls120
Doesn't surprise me a bit. UA's long haul Y product is increasingly not competitive.
Agree, but this is more of a big-picture issue. DL (with their magnificent Y product) and AA reporting similar weakness over recent quarters.

Last edited by EWR764; Jan 17, 2019 at 6:38 am
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Old Jan 17, 2019, 7:40 am
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Originally Posted by EWR764
Agree, but this is more of a big-picture issue. DL (with their magnificent Y product) and AA reporting similar weakness over recent quarters.
Their magnificent Y certainly

didnt save HKG as a destination,
didnt help with the collapse of JFK NRT (they couldve bid JFK HND or even ATL HND instead of MSP HND so they have no one to blame but themselves)
didnt do much good for MSP HND as DL now is on record to be the only airline, on both sides of the Pacific, to beg for flexibility on DAYTIME Haneda slots

and from the way things are going, isnt doing much to actually launch their Mumbai route either.

while all of that is happening, UA launched their 5th route to AMS, an airport no one would deny is a Skyteam fortress, and without whining about lack of feed either.
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Old Jan 17, 2019, 7:46 am
  #26  
 
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Originally Posted by goodeats21
They are already reducing EWR frequency and capacity for DAY and CVG. I don't use CMH, so haven't been tracking it.

But DAY has gone from 2x daily to EWR, down to 1x daily....
And CVG has gone from almost exclusively 2-cabin RJs (E70s and E75s), to a 50% mix of 50 seaters now.

So you may not have to connect in IAD...but i doubt the schedule / equipment will remain as convenient.
For equipment, as long as it's not a CRJ200, I don't care. I enjoy the E170/175, but the 145 is fine for this flight to be honest. It's short enough that it doesn't matter.
But for frequency, that I care about quite a bit. It's nice to have the early morning and afternoon options for the outbound to CMH, and the same - late afternoon and early morning return to EWR are great. Adding an 11pm departure CMH-EWR (post-client-dinner) would save me a bunch of hotel overnights, but I don't see that in the cards....

As long as I don't have to hop around, I'll be fine. I remember a time when EWR-CLE-CMH was the way to get there. Don't want to go back.
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Old Jan 17, 2019, 8:18 am
  #27  
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Originally Posted by EWR764
Agree, but this is more of a big-picture issue. DL (with their magnificent Y product) and AA reporting similar weakness over recent quarters.
Didnt realize this. That said, when all the UA 772s have been Polarized with 10 across Y, DLs 777s, 330, and 767 will be my choice every time over sardine class on UA.
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Old Jan 17, 2019, 9:08 am
  #28  
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Originally Posted by EWR764


Agree, but this is more of a big-picture issue. DL (with their magnificent Y product) and AA reporting similar weakness over recent quarters.
Delta's 3Q18 unit revenue TATL was up 7.8% vs. '17, and 4Q was up 4.1%. Those were, in fact, DL's best performances by region.
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Old Jan 17, 2019, 9:15 am
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Originally Posted by williambruno1975


Their “magnificent Y” certainly

• didn’t save HKG as a destination,
• didn’t help with the collapse of JFK NRT (they could’ve bid JFK HND or even ATL HND instead of MSP HND so they have no one to blame but themselves)
• didn’t do much good for MSP HND as DL now is on record to be the only airline, on both sides of the Pacific, to beg for flexibility on DAYTIME Haneda slots

and from the way things are going, isn’t doing much to actually launch their Mumbai route either.

while all of that is happening, UA launched their 5th route to AMS, an airport no one would deny is a Skyteam fortress, and without whining about “lack of feed” either.


I was being facetious.

Originally Posted by 3Cforme
Delta's 3Q18 unit revenue TATL was up 7.8% vs. '17, and 4Q was up 4.1%. Those were, in fact, DL's best performances by region.
UA also increased TATL ASM 8.0% yoy in the quarter and still achieved 1.6% regional PRASM growth in 4Q. Delta only grew TATL 3% in the quarter and saw 4.1% better PRASM. Again, they acknowledge most of that was driven by premium cabin improvement and softer 2017 comps. TATL Y yield softness is a broader phenomenon, not just UA, and is tough to attribute to a less-competitive product.

TATL Y is pressured by the expansion of low-cost competition, but we are already seeing major changes in that space (Primera folding, WOW/Norwegian contracting, etc.), which definitely inures to the benefit of legacy carriers. UA also matched its JV partners in offering a "Light" TATL fare product, which basically strips benefits from the lowest fares in order to optimize costs to deliver fares competitive to the Norwegians and Levels of the world.
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Old Jan 17, 2019, 9:44 am
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Originally Posted by EWR764
I was being facetious
Hehe me too ... my intended audience are those who claim soviet gulags and North Korean labor camps are better than flying UA yet refuse to leave Hahahha
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