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United Airlines Reports Third-Quarter 2019 Performance & Earnings Call 16 Oct 2019

United Airlines Reports Third-Quarter 2019 Performance & Earnings Call 16 Oct 2019

Old Oct 15, 19, 9:15 am
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United Airlines Reports Third-Quarter 2019 Performance & Earnings Call 16 Oct 2019

United Airlines Reports Third-Quarter 2019 Performance
United Airlines Raises Full Year 2019 Adjusted Diluted Earnings Per Share Guidance

Expects to meet or exceed $11 to $13 adjusted diluted earnings per share(1) target for 2020

Company achieves third consecutive quarter of pre-tax margin expansion; fourth consecutive quarter on an adjusted basis(2)

CHICAGO, Oct. 15, 2019 /PRNewswire/ -- United Airlines (UAL) today announced that it has achieved third quarter diluted earnings per share (EPS) of $3.99 and adjusted diluted EPS2 of $4.07, and raised its full year 2019 adjusted diluted EPS1 guidance, with a new range of $11.25 to $12.25.

"Thanks to the outstanding efforts of our employees, United extended our streak of expanding pre-tax margin on a quarterly basis. It provides us further confidence to raise our full year 2019 adjusted diluted EPS guidance, putting us ahead of pace to achieve our goal of $11 to $13 in adjusted diluted EPS by the end of 2020," said Oscar Munoz, CEO of United Airlines. "While headwinds affected the sector as a whole this quarter, United's team once again demonstrated a robust ability to overcome adverse cost pressure, managing to continue growing our network while investing in winning our customers' loyalty through smart enhancements to the United experience."
  • Reported third quarter net income of $1.0 billion, diluted earnings per share of $3.99, pre-tax earnings of $1.3 billion and pre-tax margin of 11.9 percent, expanding pre-tax margin 2.3 points versus the third quarter of 2018.
  • Reported third quarter adjusted net income of $1.0 billion, adjusted diluted EPS of $4.07, adjusted pre-tax earnings of $1.4 billion and adjusted pre-tax margin of 12.1 percent, expanding adjusted pre-tax margin 2.5 points versus the third quarter of 2018.
  • Consolidated third quarter passenger revenue per available seat mile (PRASM) increased 1.7 percent year-over-year.
  • Consolidated third quarter unit cost per available seat mile (CASM) decreased 0.9 percent year-over-year.
  • Consolidated third quarter CASM, excluding special charges, third party business expenses, fuel and profit sharing, increased 2.1 percent year-over-year.
  • Repurchased $363 million of its common shares in the third quarter of 2019 at an average purchase price of $88.22 per share.
  • Raised $1.2 billion in Enhanced Equipment Trust Certificates at a record low blended interest rate of 2.8% in connection with the financing of certain aircraft.


1 Excludes special charges and the mark-to-market impact of financial instruments, the nature of which are not determined at this time, and imputed interest on certain finance leases. Accordingly, UAL is not providing earnings guidance on a GAAP basis.

2 Excludes special charges, the mark-to-market impact of financial instruments and imputed interest on certain finance leases. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.

For more information on UAL's fourth quarter and full year 2019 guidance, please visit ir.united.com for the company's investor update.

Third Quarter 2019 Highlights
Customer Experience

  • Announced MileagePlus award miles never expire, giving members a lifetime to use miles on flights, experiences, hotels and more.
  • Announced partnership with CLEAR which includes a free or discounted CLEAR membership for U.S. based MileagePlus members.
  • MileagePlus members between the ages of 18 to 22 receive a 10% discount on domestic flights when booked through the United mobile app by Dec. 31, 2019.
  • Announced improvements to United PassPlus, the airline's prepaid program that offers discounts, fixed fares and amenities to both individual and corporate customers.
  • Customers are now provided three inflight snack options on domestic flights regardless of departure time, including the Stroopwafel.
  • Customers can now pre pay for bags as soon as their ticket is issued. Previously customers had to wait until check-in to pay for their bags.
  • MileagePlus loyalty program was awarded Favorite Frequent-Flyer Program for the fourth time by Trazee Awards and the United Explorer Card from Chase was awarded Favorite Credit Card for the second consecutive year.
Operations
  • Achieved No. 1 in on-time departures in all hubs where United faces large hub competitors: Denver, Chicago and Los Angeles.
  • Completed introduction of ConnectionSaver to all of seven domestic hubs, saving over 35,000 connections in the quarter.
Employees
  • Honored with being recognized by search site indeed.com as a "Top 50 Workplace" for 2019.
  • Recognized for fourth consecutive year as a top-scoring company and best place to work for disability and inclusion with a perfect score of 100% on the 2019 Disability Equality Index.
  • Expects to hire about 8,000 people by the end of 2019.
Network
  • Announced 12 new and expanded international routes from Chicago, Denver, New York/Newark and San Francisco including Nice, France; Palermo, Italy; and Curacao.
  • Announced nonstop service to Tokyo Haneda with routes from Chicago, Los Angeles, New York/Newark and Washington, D.C., beginning March 28, 2020.
  • Resumed daily nonstop service between New York/Newark and Delhi and Mumbai on September 6.
Fleet
  • Launched Boeing 767-300ER ultra-premium United Polaris business class configuration on all flights between New York/Newark and London-Heathrow starting Sept. 15, 2019.
  • Took delivery of six used Airbus A319 aircraft and nine new Embraer E175 aircraft.
Community
  • Launched Crowdrise fundraising campaign for those affected by Hurricane Dorian.
  • Operated a Boeing 787-8 Dreamliner crewed exclusively by women to the largest airshow in the world, EAA AirVenture in Oshkosh, Wisconsin, to symbolize the airline's commitment to supporting women in aviation.
Investor Day

On March 5, 2020 United will host an investor event in New York. More details will be provided at a later date.

Earnings Call

UAL will hold a conference call to discuss its third-quarter 2019 financial results and its financial and operational outlook for fourth-quarter and full-year 2019 on Wednesday, October 16, 2019, 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.

Every customer. Every flight. Every day.

In 2019, United is focusing more than ever on its commitment to its customers, looking at every aspect of its business to ensure that the carrier keeps customers' best interests at the heart of its service. In addition to today's announcement, this year United:
  • Announced that MileagePlus award miles will never expire
  • Gave Economy customers a choice of complimentary snacks on domestic flights
  • Made DIRECTV free for every customer on more than 200 aircraft
  • Released a new version of the award-winning, most downloaded app in the airline industry
  • Launched a new tool called ConnectionSaver, dedicated to improving the experience for customers with connecting flights
  • Partnered with CLEAR on free or discounted memberships for MileagePlus members
  • Announced PlusPoints, new upgrade benefits for MileagePlus Premier members
  • And introduced products in its amenity kits made exclusively for the airline by luxury skincare line Sunday Riley
PDF

Links
Q3 presentation link
Q3 call transcript link
Q3 webcast recording link ... mp3

Quarterly 10-K

Investor Update -- 15 Oct 2019

United Airlines Reports Second-Quarter 2019 Performance & Earnings Call 17 July 2019

United Airlines Reports Third-Quarter 2018 Performance & Earnings Call 17 Oct 2018

Last edited by WineCountryUA; Oct 22, 19 at 11:23 am
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Old Oct 15, 19, 9:17 am
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United Airlines to Hold Live Webcast of Third-Quarter 2019 Financial Results
October 01, 2019

CHICAGO, Oct. 1, 2019 /PRNewswire/ -- United Airlines will hold a conference call to discuss third-quarter 2019 financial results on Wednesday, October 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 third-quarter financial results and fourth-quarter investor update after market close on Tuesday, October 15.

The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
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Old Oct 15, 19, 4:22 pm
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Given the jamming 1ks got this year - I will be interested to see how this all works out in the long run.

https://www.wsj.com/articles/united-...e_below_a_pos1

For the third quarter, United reported a 1.7% increase in passenger unit revenue, a closely watched metric of how much airlines make flying a passenger a mile. That is a sign of persistently strong travel bookings even as economists point to signs that the global economy could be starting to falter.

Airline investors have raised concerns about a potential flood of capacity next year whenever the MAX returns to service, as well as rising costs from new labor deals in the works.
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Old Oct 15, 19, 5:58 pm
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From the third quarter highlights:

"MileagePlus loyalty program was awarded Favorite Frequent-Flyer Program for the fourth time by Trazee Awards and the United Explorer Card from Chase was awarded Favorite Credit Card for the second consecutive year."

Yeah...after the axe they took to it this year they will never be able to recycle that bullet point again.
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Old Oct 15, 19, 6:06 pm
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Originally Posted by gmt4 View Post
From the third quarter highlights:

"MileagePlus loyalty program was awarded Favorite Frequent-Flyer Program for the fourth time by Trazee Awards and the United Explorer Card from Chase was awarded Favorite Credit Card for the second consecutive year."

Yeah...after the axe they took to it this year they will never be able to recycle that bullet point again.
Hahahaha, it definitely won't get that award next year after the huge wave of MPE cancellations that result from pulling the PQD waiver.
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Old Oct 15, 19, 11:33 pm
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For what seems like one of the most hated airlines on FT, $1B net Q3 revenue and raising guidance is quite an accomplishment.
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Old Oct 16, 19, 1:10 am
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Originally Posted by HNLbasedFlyer View Post
For what seems like one of the most hated airlines on FT, $1B net Q3 revenue and raising guidance is quite an accomplishment.
Yup. Operating margin 13.2% (up 2.3%). The airline that must not be named (DL, oops) was up 2.6% so very comparable in improvement. And with fuel costs well down YOY, with those MAX's parked and the lucrative India flights not running until September it's a case of 2.3% improvement in an operationally "bad quarter".

Looks very solid. Can't wait to listen to the earnings call (not live, I have meetings tomorrow morning).
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Old Oct 16, 19, 1:18 am
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Can't the MAX groundings explain this? First, CASM is down (slightly) due to low fuel prices. And with the MAX grounded, flights have been canceled and the remaining flights have a higher load factor, hence PRASM is up a bit.
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Old Oct 16, 19, 2:59 am
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Originally Posted by HNLbasedFlyer View Post
For what seems like one of the most hated airlines on FT, $1B net Q3 revenue and raising guidance is quite an accomplishment.
Maybe $1B net Q3 is exactly why they earned "most hated": that comes partly from cheaping out on the flight experience.
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Old Oct 16, 19, 3:07 am
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Originally Posted by HNLbasedFlyer View Post
For what seems like one of the most hated airlines on FT, $1B net Q3 revenue and raising guidance is quite an accomplishment.
Agreed. Itís impressive.
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Old Oct 16, 19, 6:37 am
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Originally Posted by STS-134 View Post
Can't the MAX groundings explain this? First, CASM is down (slightly) due to low fuel prices. And with the MAX grounded, flights have been canceled and the remaining flights have a higher load factor, hence PRASM is up a bit.
MAX grounding doesn't really help.. the planes are just siting on the ground generating expenses (amortization if nothing else) and earning nothing. If grounding the fleet was more profitable they wouldn't buy in the first place
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Old Oct 16, 19, 8:33 am
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Or they could ground the entire fleet and just fly 1 plane and charge an infinite amount for a ticket.

Revenge of Kirby going well. AA flop.
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Old Oct 16, 19, 9:07 am
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Originally Posted by findark View Post
MAX grounding doesn't really help.. the planes are just siting on the ground generating expenses (amortization if nothing else) and earning nothing. If grounding the fleet was more profitable they wouldn't buy in the first place
Are those costs part of the exclusions? Not sure how to parse the "imputed interest on certain finance leases" language. Would assume Boeing is on the hook for some (all?) of those types of costs?

1 Excludes special charges and the mark-to-market impact of financial instruments, the nature of which are not determined at this time, and imputed interest on certain finance leases. Accordingly, UAL is not providing earnings guidance on a GAAP basis.

2 Excludes special charges, the mark-to-market impact of financial instruments and imputed interest on certain finance leases. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release.

Last edited by goodeats21; Oct 16, 19 at 9:58 am Reason: typo
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Old Oct 16, 19, 9:22 am
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Originally Posted by goodeats21 View Post
Are those costs part of the exclusions? Not sure how to parse the "imputed interested on certain finance leases" language. Would assume Boeing is on the hook for some (all?) of those types of costs?
Not related - that has to due with some technicalities about the treatment of various lease payments on some E45s that were converted to rent-to-own:

During the third quarter of 2018, United entered into an agreement with the lessor of 54 Embraer ERJ 145 aircraft to purchase those aircraft in 2019. The provisions of the new lease agreement resulted in a change in accounting classification of these new leases from operating leases to finance leases up until the purchase date. As a result of this change, the company recognized $22 million and $68 million, respectively, of additional interest expense in the three and nine months ended September 30, 2019, and $13 million of additional interest expense in the third quarter of 2018.
I don't see anything in the books (yet) accounting for Boeing making United whole for the grounding, but I'm not entirely up on what the situation is there and if it would be public if it were.

Amortization of a couple of dozen MAX 9s for part of the year is not going to be a huge financial hit, but it's not increasing profit either.
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Old Oct 16, 19, 9:36 am
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Originally Posted by findark View Post
MAX grounding doesn't really help.. the planes are just siting on the ground generating expenses (amortization if nothing else) and earning nothing. If grounding the fleet was more profitable they wouldn't buy in the first place
But the costs of the grounded fleet don't factor in to PRASM right? I mean, it's just how much revenue they got from pax for each seat they flew a mile.
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