UA Q4/Full Year 2018 Results/Conference Call 16 Jan 2019
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UA Q4/Full Year 2018 Results/Conference Call 16 Jan 2019
United Airlines Reports Full-Year and Fourth-Quarter 2018 Performance
Q4 unit revenue up 5.0% year-over-year; full-year diluted 2018 EPS of $7.70; adjusted diluted EPS of $9.13
CHICAGO, Jan. 15, 2019
In a departure from industry trends, United (UAL) announced today that its fourth-quarter unit revenue came in at the high end of its guidance range and also exceeded its full-year adjusted diluted earnings per share target laid out last January. UAL reported full-year net income of $2.1 billion, diluted earnings per share of $7.70 (a 9.1 percent increase year-over-year), pre-tax earnings of $2.7 billion and pre-tax margin of 6.4 percent. UAL reported adjusted full-year net income of $2.5 billion, adjusted pre-tax earnings of $3.2 billion and adjusted pre-tax margin of 7.7 percent.1 UAL increased its full-year 2018 adjusted diluted earnings per share outlook three times during the year despite a $2.4 billion year-over-year headwind from fuel. Full-year adjusted diluted earnings per share increased 33.5 percent year-over-year to $9.13, above the high end of the company's most recent guidance range.1
"United's financial performance is a testament to the successful implementation of the first year of our strategic plan and to the record-setting operational performance powered by the more than 90,000 airline professionals who work at United," said Oscar Munoz, chief executive officer of United Airlines. "United delivered proof, not just promises in 2018 - even in the face of significant headwinds from higher than expected fuel costs. It's why I couldn't be more proud of our winning culture and customer-focused team and continue to be enthusiastic about United's bright future."
For 2019, UAL expects adjusted diluted earnings per share to again grow year-over-year to between $10.00 to $12.00.2
2018 Highlights
Record-Setting Operational Performance3
UAL will hold a conference call to discuss its fourth-quarter and full-year 2018 financial results and its financial and operational outlook for the first quarter and full year of 2019 on Wednesday, January 16, 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.
footnotes
1Adjusted pre-tax earnings and adjusted pre-tax margin exclude special charges, the mark-to-market ("MTM") impact of financial instruments and imputed interest on certain capitalized leases. Adjusted net income and adjusted diluted earnings per share exclude special charges, the MTM impact of financial instruments, imputed interest on certain capitalized leases and certain tax adjustments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.
2 Excludes special charges and the MTM impact of financial instruments, the nature of which are not determinable at this time, and imputed interest on certain capitalized leases. Accordingly, UAL is not providing earnings guidance on a GAAP basis.
3 Company history defined as post-2010 merger; company records measured from 2010 merger.
Q4 unit revenue up 5.0% year-over-year; full-year diluted 2018 EPS of $7.70; adjusted diluted EPS of $9.13
CHICAGO, Jan. 15, 2019
In a departure from industry trends, United (UAL) announced today that its fourth-quarter unit revenue came in at the high end of its guidance range and also exceeded its full-year adjusted diluted earnings per share target laid out last January. UAL reported full-year net income of $2.1 billion, diluted earnings per share of $7.70 (a 9.1 percent increase year-over-year), pre-tax earnings of $2.7 billion and pre-tax margin of 6.4 percent. UAL reported adjusted full-year net income of $2.5 billion, adjusted pre-tax earnings of $3.2 billion and adjusted pre-tax margin of 7.7 percent.1 UAL increased its full-year 2018 adjusted diluted earnings per share outlook three times during the year despite a $2.4 billion year-over-year headwind from fuel. Full-year adjusted diluted earnings per share increased 33.5 percent year-over-year to $9.13, above the high end of the company's most recent guidance range.1
"United's financial performance is a testament to the successful implementation of the first year of our strategic plan and to the record-setting operational performance powered by the more than 90,000 airline professionals who work at United," said Oscar Munoz, chief executive officer of United Airlines. "United delivered proof, not just promises in 2018 - even in the face of significant headwinds from higher than expected fuel costs. It's why I couldn't be more proud of our winning culture and customer-focused team and continue to be enthusiastic about United's bright future."
For 2019, UAL expects adjusted diluted earnings per share to again grow year-over-year to between $10.00 to $12.00.2
- UAL reported fourth-quarter net income of $462 million, diluted earnings per share of $1.70, pre-tax earnings of $556 million and pre-tax margin of 5.3 percent.
- UAL reported fourth-quarter adjusted net income of $657 million, adjusted diluted earnings per share of $2.41 and adjusted pre-tax earnings of $814 million.
- UAL reported fourth-quarter adjusted pre-tax margin of 7.8 percent,1 expanding margin on an adjusted basis of 0.9 points versus the fourth-quarter of 2017.
- UAL recovered 98% percent of the year-over-year increase in fuel prices in 2018.
- Consolidated fourth-quarter passenger revenue per available seat mile (PRASM) increased 5 percent year-over-year, at the high end of the company's fourth-quarter 2018 guidance range.
- Consolidated fourth-quarter unit cost per available seat mile (CASM) increased 7.0 percent year-over-year.
- Consolidated fourth-quarter CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.7 percent year-over-year.
- Employees earned $334 million in profit sharing for 2018.
2018 Highlights
Record-Setting Operational Performance3
- Set new UAL records by flying the most revenue passengers ever, operating the most mainline departures and achieving the fewest cancellations ever in a year, resulting in more UAL customers departing on-time in 2018 than ever before.
- For the year, achieved the best completion rate in company history with more than 1.7 million flights.
- In 2018, achieved the best ever company STAR performance (first departures of the day), with nearly 250,000 flights leaving on time.
- In the fourth quarter, the company achieved top-tier performance in on-time departures among its largest competitors. For the December holiday season, UAL had its best-ever on-time departure performance while flying the most revenue customers it had ever flown during the holiday period.
- Opened three new United Polaris lounges located in San Francisco International Airport, Newark Liberty International Airport and Houston's George Bush Intercontinental Airport.
- Announced UAL's newest premium seating, United® Premium Plus, which will provide more space, comfort and amenities on select international flights starting later this year.
- Introduced a new boarding process designed to reduce customers' stress by reducing time spent waiting in line and providing them with improved boarding information.
- Expanded personal device entertainment option to all aircraft, providing at least one free entertainment option on all Wi-Fi equipped aircraft.
- MileagePlus loyalty program voted Best Overall Frequent-Flyer Program in the world for the 15th consecutive year by readers of Global Traveler, and voted Favorite Frequent-Flyer Program in the Trazee Awards.
- Employees earned incentive payments totaling approximately $14 million for achieving operational performance goals in the quarter, marking a full year of earned incentive payments totaling $55 million.
- Introduced and trained over 90,000 team members on UAL's new customer service decision framework, the core4, which focuses on the principles of safe, caring, dependable and efficient.
- Deployed 6,000 iPads to maintenance employees, improving reliability and efficiency.
- Unveiled a state-of-the-art flight training center in Denver, Colorado - the largest in the world and home to the company's more than 30 full flight simulators representing all of UAL's fleet types.
- Successfully completed the full implementation of the flight attendant joint collective bargaining agreement, allowing the company to operate more efficiently and reliably.
- Achieved the top score of 100 percent on the 2018 Disability Equality Index (DEI), a prominent benchmarking metric that rates U.S. companies on their disability inclusion policies and practices, also earning UAL a place on DEI's 2018 "Best Places to Work" list.
- 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.
- Introduced 93 new routes, adding more flights in 2018 than any other U.S. airline.
- Announced new international service including Washington-Dulles to Tel Aviv, Israel; San Francisco to Amsterdam, Netherlands; Newark/New York to Naples, Italy; as well as Newark/New York to Prague, Czech Republic and Denver to Frankfurt, Germany, all subject to government approval.
- Launched several exciting new international routes including Houston to Sydney, San Francisco to Tahiti and Denver to London.
- 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.
- Announced a joint business agreement with Compańía Panameńa de Aviación S.A. (Copa), Aerovías del Continente Americano S.A. (Avianca) and many of Avianca's affiliates, pending government approval.
- Took delivery of 21 new Boeing aircraft, including four 777-300ER, four 787-9, three 787-10 and ten 737 MAX 9 aircraft.
- In December 2018, ordered an additional four Boeing 777-300ER aircraft and 24 737 MAX aircraft.
- Pledged to reduce the company's greenhouse gas emissions by 50 percent by 2050, the only U.S. airline to commit to emissions reductions, further strengthening UAL's ambition to be the world's most environmentally conscious airline.
- Announced a total of $8 million in grants to benefit organizations in each of UAL's domestic hub communities.
- Announced new global partnership with the Special Olympics and flew hundreds of Team USA Olympic and Paralympic Winter Games 2018 athletes, coaches and family members to PyeongChang, South Korea, continuing the 38-year relationship between UAL and the United States Olympic Committee.
- Ranked No. 1 among global carriers in Newsweek's 2017 Global 500 Green Rankings, one of the most recognized environmental performance assessments of the world's largest publicly traded companies.
- Launched a Crowdrise fundraising campaign to support those affected by Hurricane Florence, Typhoon Mangkhut, flooding in Western Japan, wildfires in California and other disasters.
UAL will hold a conference call to discuss its fourth-quarter and full-year 2018 financial results and its financial and operational outlook for the first quarter and full year of 2019 on Wednesday, January 16, 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.
footnotes
1Adjusted pre-tax earnings and adjusted pre-tax margin exclude special charges, the mark-to-market ("MTM") impact of financial instruments and imputed interest on certain capitalized leases. Adjusted net income and adjusted diluted earnings per share exclude special charges, the MTM impact of financial instruments, imputed interest on certain capitalized leases and certain tax adjustments. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.
2 Excludes special charges and the MTM impact of financial instruments, the nature of which are not determinable at this time, and imputed interest on certain capitalized leases. Accordingly, UAL is not providing earnings guidance on a GAAP basis.
3 Company history defined as post-2010 merger; company records measured from 2010 merger.
Links
Q4 / 2018 Full Year presentation link
Q4 / 2018 Full Year call transcript link
Q4 / 2018 Full Year webcast recording link, mp3 link -- 67 minutes
Q4 / 2018 Full Year 10-Q
Investor Update -- 15 Jan 2019
Past reports
United Airlines Reports Third-Quarter 2018 Performance & Earnings Call 17 Oct 2018
UA Q4/Full Year 2017 Results/Conference Call 23 Jan 2018
Last edited by WineCountryUA; Jan 16, 2019 at 5:30 pm Reason: transcript link
#2
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United Airlines to Hold Live Webcast of Fourth-Quarter and Full-Year 2018 Financial Results
CHICAGO, Jan. 7, 2019
United Airlines will hold a conference call to discuss fourth-quarter and full-year 2018 financial results on Wednesday, January 16, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com. The company will issue its fourth-quarter and full-year 2018 financial results and first-quarter 2019 investor update after market close on Tuesday, January 15.
The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
Notable Special Charges
For fourth quarter 2018, the company expects to record a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
The company expects to also record a one-time termination fee with a present value of $64 million ($50 million net of tax) related to one of its engine maintenance service agreements.
CHICAGO, Jan. 7, 2019
United Airlines will hold a conference call to discuss fourth-quarter and full-year 2018 financial results on Wednesday, January 16, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com. The company will issue its fourth-quarter and full-year 2018 financial results and first-quarter 2019 investor update after market close on Tuesday, January 15.
The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
Notable Special Charges
For fourth quarter 2018, the company expects to record a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
The company expects to also record a one-time termination fee with a present value of $64 million ($50 million net of tax) related to one of its engine maintenance service agreements.
#3
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After closing trading the stock is up more than 5%. Best financial year for United in a long time. There were rumours of more 77Ws. Bringing the fleet to 22 fully replaces the 747s in terms of capacity for all in tense and purposes. The first two of the additional order arrive before the end of the year and I assume the next two will be in 2020. I’m guessing they will go toward routes where it’s too far for the retrofitted GE powered 772s like ORD-HKG, even with the special charge they are incurring. More MAXs, more growth, and hopefully fewer 50 seaters trickling down. Unfortunately, the 50 seaters keep getting added with nine more this year, even with 21 more 737-9 MAXs and 5 more A319s added. Three 757s are leaving and I assume these are PS aircraft coming up against a D Check that isn’t worth the hassle. All in all, UAL is finally heading towards what it was supposed to become with the merger almost nine years ago.
Last edited by Longboater; Jan 15, 2019 at 2:52 pm
#4
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What? I didn't see an announcement that UA ordered 4 MORE 777-300s is this an error in the press release? Also whats happening with the A350s?
cut paste from PRESS Release above.
Fleet
cut paste from PRESS Release above.
Fleet
- Took delivery of 21 new Boeing aircraft, including four 777-300ER, four 787-9, three 787-10 and ten 737 MAX 9 aircraft.
- In December 2018, ordered an additional four Boeing 777-300ER aircraft and 24 737 MAX aircraft.
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After closing trading the stock is up more than 5%. Best financial year for United in a long time. There were rumours of more 77Ws. Bringing the fleet to 22 fully replaces the 747s in terms of capacity for all in tense and purposes. The first two of the additional order arrive before the end of the year and I assume the next two will be in 2020. I’m guessing they will go toward routes where it’s too far for the retrofitted GE powered 772s like ORD-HKG, even with the special charge they are incurring. More MAXs, more growth, and hopefully fewer 50 seaters trickling down. Unfortunately, the 50 seaters keep getting added with nine more this year, even with 21 more 737-9 MAXs and 5 more A319s added. Three 757s are leaving and I assume these are PS aircraft coming up against a D Check that isn’t worth the hassle. All in all, UAL is finally heading towards what it was supposed to become with the merger almost nine years ago.
#6
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They do, however with the additional weight of going to 3x4x3 in coach range will be reduced and I believe the GE 772ERs were already close to the edge of their range on the long routes (e.g. EWR -> DEL/BOM). BOM has already been upguaged to the 77W, I suspect we will hear a DEL announcement once the new aircraft arrive. It would be nice to see BLR added at some point.
#7
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The 777-300ER is the most capable long range high capacity plane ever built. (Yes, I stand by those words even with the A350-1000 as it took Airbus forever to come up a response to the 777-300ER and the sales of the A350-1000 prove it.) The biggest reason why the 777-200LR did not sell as well as it should have was the 777-300ER way out-performed and exceeded expectations. For example, EVA ordered the 777-200LR to fly TPE-JFK as the 777-300ER originally did not have the range. Additionally, CX was sceptical if the aircraft had the range to fly LAX-HKG in the winter and thought the 747-400 was better suited for the route. Well, the performance and capacity have made the 777-300ER the best selling single specific widebody type. (For those wondering, the second is the A330-300.)
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#9
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Excellent results. Even though fuel prices plummeted in the quarter from its end Sept high the fuel bill was still 24% higher than Q4-17. And UA’s operating margin went UP 0.6%.
That other airline that always gets compared against on these threads also reported today. And while that OAL is still more profitable (and its results also very good) UA closed the margin gap for both the quarter (by 1.9%) and the year (1.1%), and had significantly better increases in PRASM (5% vs 2.7%) and TRASM (4.8% vs 3.2%). And ex-fuel CASM was down 0.7% (vs OAL -0.5%).
Looking forward to the call. It’ll be interesting to hear what UA has to say about headwinds associated with the shutdown, and potentially TATL prospects in the light of Brexit (the UK Parliament rejected the withdrawal agreement) and other issues in Europe.
That other airline that always gets compared against on these threads also reported today. And while that OAL is still more profitable (and its results also very good) UA closed the margin gap for both the quarter (by 1.9%) and the year (1.1%), and had significantly better increases in PRASM (5% vs 2.7%) and TRASM (4.8% vs 3.2%). And ex-fuel CASM was down 0.7% (vs OAL -0.5%).
Looking forward to the call. It’ll be interesting to hear what UA has to say about headwinds associated with the shutdown, and potentially TATL prospects in the light of Brexit (the UK Parliament rejected the withdrawal agreement) and other issues in Europe.
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This is correct. The RR powered aircraft can also haul the full 656k. Delta’s eight 777-200ERs are rated at 656k. With more 789/78J/77Ws on the way, in addition to international expansion, the first 767 retirements can begin. I expect it will be an indirect replacement, somewhat similar to what AA has done with their initial round of 767 retirements, where the 764s/PW powered 772s replace the 763s and the new aircraft takeover elsewhere.
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Some interesting notes from the call:
- 11% better year-over-year corporate bookings last week (busiest corporate booking week of the year) which is viewed as a good leading indicator of corporate bookings/budgets for the full year
- Atlantic economy class yield is softening
- No appreciable impact on China premium yields to date
- More cutting of unprofitable flying is likely to come
- Gemini spool-up wasn't completed until about 2Q18, so PRASM benefits year-over-year continuing
- 60 aircraft will either be inducted or reconfigured into Polaris this year
- 50% of the company's pre-6am flights have been cut or moved to later departure times, PRASM is 9% greater in the 0600 hour than than 0500 hour
- New Asia flying (including new SIN-SFO frequency) has been successful
- DEN rebanking goes into effect on February 14, departures per bank go from 43 to 50 (removing one bank, rescheduling flying)
- Mid-continent hub departures in-bank will go from 89% to 95%
- Company is growing premium capacity EWR-LAX/SFO
- 787-10 over the Atlantic will result in approximately 10% CASM benefit over types it replaces (assuming 772ER in most cases), but lower RASM given greater capacity
- In 2019, "mainline markets will, more often, have mainline aircraft"; changes in deployment of RJs over last few years; want smaller regional aircraft in shorter "catchment" markets
- 11% better year-over-year corporate bookings last week (busiest corporate booking week of the year) which is viewed as a good leading indicator of corporate bookings/budgets for the full year
- Atlantic economy class yield is softening
- No appreciable impact on China premium yields to date
- More cutting of unprofitable flying is likely to come
- Gemini spool-up wasn't completed until about 2Q18, so PRASM benefits year-over-year continuing
- 60 aircraft will either be inducted or reconfigured into Polaris this year
- 50% of the company's pre-6am flights have been cut or moved to later departure times, PRASM is 9% greater in the 0600 hour than than 0500 hour
- New Asia flying (including new SIN-SFO frequency) has been successful
- DEN rebanking goes into effect on February 14, departures per bank go from 43 to 50 (removing one bank, rescheduling flying)
- Mid-continent hub departures in-bank will go from 89% to 95%
- Company is growing premium capacity EWR-LAX/SFO
- 787-10 over the Atlantic will result in approximately 10% CASM benefit over types it replaces (assuming 772ER in most cases), but lower RASM given greater capacity
- In 2019, "mainline markets will, more often, have mainline aircraft"; changes in deployment of RJs over last few years; want smaller regional aircraft in shorter "catchment" markets
Last edited by EWR764; Jan 16, 2019 at 9:35 am
#13
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Some interesting notes from the call:
- 11% better year-over-year corporate bookings last week (busiest corporate booking week of the year) which is viewed as a good leading indicator of corporate bookings/budgets for the full year
- Atlantic economy class yield is softening
- No appreciable impact on China premium yields to date
- More cutting of unprofitable flying is likely to come
- Gemini spool-up wasn't completed until about 2Q18, so PRASM benefits year-over-year continuing
- 60 aircraft will either be inducted or reconfigured into Polaris this year
- 50% of the company's pre-6am flights have been cut or moved to later departure times, PRASM is 9% greater in the 0600 hour than than 0500 hour
- New Asia flying (including new SIN-SFO frequency) has been successful
- DEN rebanking goes into effect on February 14, departures per bank go from 43 to 50 (removing one bank, rescheduling flying)
- Mid-continent hub departures in-bank will go from 89% to 95%
- Company is growing premium capacity EWR-LAX/SFO
- 787-10 over the Atlantic will result in approximately 10% CASM benefit over types it replaces (assuming 772ER in most cases), but lower RASM given greater capacity
- In 2019, "mainline markets will, more often, have mainline aircraft"; changes in deployment of RJs over last few years; want smaller regional aircraft in shorter "catchment" markets
- 11% better year-over-year corporate bookings last week (busiest corporate booking week of the year) which is viewed as a good leading indicator of corporate bookings/budgets for the full year
- Atlantic economy class yield is softening
- No appreciable impact on China premium yields to date
- More cutting of unprofitable flying is likely to come
- Gemini spool-up wasn't completed until about 2Q18, so PRASM benefits year-over-year continuing
- 60 aircraft will either be inducted or reconfigured into Polaris this year
- 50% of the company's pre-6am flights have been cut or moved to later departure times, PRASM is 9% greater in the 0600 hour than than 0500 hour
- New Asia flying (including new SIN-SFO frequency) has been successful
- DEN rebanking goes into effect on February 14, departures per bank go from 43 to 50 (removing one bank, rescheduling flying)
- Mid-continent hub departures in-bank will go from 89% to 95%
- Company is growing premium capacity EWR-LAX/SFO
- 787-10 over the Atlantic will result in approximately 10% CASM benefit over types it replaces (assuming 772ER in most cases), but lower RASM given greater capacity
- In 2019, "mainline markets will, more often, have mainline aircraft"; changes in deployment of RJs over last few years; want smaller regional aircraft in shorter "catchment" markets
Thanks for some highlights, EWR764! ^
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