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UA Q4/Full Year 2019 Results/Conference Call 22 Jan 2020

UA Q4/Full Year 2019 Results/Conference Call 22 Jan 2020

Old Jan 20, 20, 11:26 pm
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UA Q4/Full Year 2019 Results/Conference Call 22 Jan 2020

United Airlines Reaches 2020 Adjusted Earnings Per Share Target One Year Ahead Of Schedule

Full year 2019 diluted EPS of $11.58; full year 2019 adjusted diluted EPS of $12.05[1]

Company achieves fourth consecutive quarter of pre-tax margin expansion, fifth on an adjusted basis[1]

CHICAGO, Jan. 21, 2020 /PRNewswire/ -- United Airlines (UAL) today announced it reached its 2020 goal -- first announced in January 2018 -- to achieve adjusted diluted earnings per share (EPS) target[2] of $11 to $13 a full year ahead of schedule. The company also achieved full year pre-tax margin growth of 2.6 points, which is expected to outpace its largest competitors for 2019.
  • Reported fourth quarter net income of $641 million, diluted EPS of $2.53, up 50% versus the fourth quarter of 2018, pre-tax earnings of $844 million and pre-tax margin of 7.8 percent, expanding pre-tax margin 2.5 points versus the fourth quarter of 2018.
  • Reported fourth quarter adjusted net income of $676 million, adjusted diluted EPS of $2.67, up 11% versus the fourth quarter of 2018, adjusted pre-tax earnings of $889 million and adjusted pre-tax margin of 8.2 percent, expanding adjusted pre-tax margin 0.5 points versus the fourth quarter of 2018.1
  • Reported full year net income of $3.0 billion, diluted EPS of $11.58, up 51% versus full year 2018, pre-tax earnings of $3.9 billion and pre-tax margin of 9.0 percent, expanding pre-tax margin 2.6 points versus full year 2018.
  • Reported full year adjusted net income of $3.1 billion, adjusted diluted EPS of $12.05, up 32% versus full year 2018, adjusted pre-tax earnings of $4.1 billion and adjusted pre-tax margin of 9.4 percent, expanding adjusted pre-tax margin 1.7 points versus full year 2018.1
  • Consolidated fourth quarter passenger revenue per available seat mile (PRASM) increased 0.8 percent year-over-year.
  • Consolidated fourth quarter unit cost per available seat mile (CASM) decreased 1.3 percent year-over-year and consolidated full year unit cost per available seat mile (CASM) decreased 1.2 percent year-over-year.
  • Consolidated fourth quarter CASM, excluding special charges, third party business expenses, fuel and profit sharing, increased 2.7 percent year-over-year. Consolidated full year CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.0 percent year-over-year.
  • Repurchased $216 million of its common shares in the fourth quarter of 2019, at an average purchase price of $88.95 per share, bringing share repurchases for full year 2019 to $1.6 billion.
"2019 was a great year for our United team -- highlighted by achieving our $11 to $13 adjusted EPS target a full year ahead of schedule," said Oscar Munoz, CEO of United Airlines. "With a four-quarter streak of expanding profit margins, when all the results are in we expect our full year 2019 pre-tax margin growth to be the highest amongst our largest competitors. When I look at United's fundamental strength, I could not be prouder of what we've accomplished in such a short time. This is the New United we set out to build more than four years ago. As we embark on a new year and decade, I believe the outlook for United's future has never been brighter."

1 Excludes special charges, unrealized gains and losses on investments 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.
2 Excludes special charges and unrealized gains and losses on investments, the nature of which are not determined at this time. Accordingly, UAL does not provide earnings guidance on a GAAP basis.


For more information on UAL's first quarter and full year 2020 guidance, please visit ir.united.com for the company's investor update.
2019 Highlights

Operations and Employees
  • Flew most revenue passengers in company history.
  • Set new company record for most mainline departures with nearly 800,000 departures.
  • Number one in on-time departures at all hubs with direct competitors -- Chicago, Denver and Los Angeles.
  • Hosted Backstage 2019, which brought all 25,000 flight attendants to Chicago for an event which was designed to underscore the important role flight attendants play in delivering great service.
  • Profit sharing for 2019 was on average 45 percent higher per participating employee year-over-year.
  • Launched Aviate, a new pilot recruiting and development program and career website to establish a more structured career path to becoming a United pilot.
  • Hired nearly 9,000 aviation professionals in well paying careers with great benefits in 2019.
Customer Experience
  • Introduced ConnectionSaver, a new tool dedicated to improving the experience for customers connecting from one United flight to the next, saving nearly 100,000 connections to be made in 2019.
  • Became the first U.S. airline to offer non-binary gender options throughout all booking channels in addition to providing the option to select the title "Mx." during booking.
  • Announced MileagePlus award miles never expire, giving members a lifetime to use miles on flights, experiences, hotels and more.
  • Announced free live DIRECTV on 211 Boeing 737 United aircraft equipped with seat back TV, providing more than 100 channels of live television.
  • Introduced a re-imagined mobile app to customers featuring a more dynamic experience that updates customers at each step of their travel journey.
  • Customers are now provided three inflight snack options on domestic flights regardless of departure time, including the Stroopwafel.
  • MileagePlus members between the ages of 18 to 22 received a discount on domestic flights when booked through the United mobile app through the end of 2019.
  • Opened the fifth of its award-winning United Polaris Lounges at Los Angeles International Airport.
  • Opened three new United Clubs at Fort Lauderdale-Hollywood International Airport, LaGuardia Airport and Raleigh-Durham International Airport.
  • Announced the addition of more than 1,600 United Polaris® business class and United First seats to nearly 250 international and domestic aircraft.
  • Began flight operations at LaGuardia Airport's new Terminal B Eastern Concourse.
  • 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.
  • Announced partnership with CLEAR which includes a free or discounted CLEAR membership for U.S.-based MileagePlus members.
Network
  • Announced a total of nine new international routes and two new expanded routes beginning in 2020, including four new daily nonstop flights to Tokyo Haneda Airport.
  • Strengthened the domestic route network with 69 new routes including launching 54 new routes and announcing 15 routes beginning in 2020.
  • Launched 11 new international routes in 2019, including direct flights from Newark Liberty International Airport to Cape Town, South Africa; Prague, Czech Republic; and Naples, Italy.
Fleet
  • Took delivery of 49 aircraft in 2019, including eight Boeing 787-10 aircraft, becoming the first carrier in the world to operate all three Dreamliner models.
  • Signed agreements to purchase 50 Airbus A321 XLR, 20 used Boeing 737-700 aircraft and 20 Embraer E175 aircraft operated by our regional partners.
  • Introduced a brand new and revolutionary regional flying experience with the addition of the two-cabin, 50-seat Bombardier CRJ 550 aircraft.
  • Unveiled next paint design, which brings a refreshed look to its fleet, serving as a visual representation of the airline's ongoing brand evolution.
  • Launched Boeing 767-300ER ultra-premium United Polaris business class configuration on all flights between New York/Newark and Chicago to London-Heathrow.
Community and Environment
  • Launched Miles on a Mission, a first-of-its-kind crowdsourcing platform which gives customers a simple way to donate miles to non-profit organizations and charities in need of air travel.
  • Pledged on Giving Tuesday to match up to 10 million MileagePlus miles to featured Miles on a Mission partners.
  • Committed $40 million toward a new investment initiative focused on accelerating the development of sustainable aviation fuels and other decarbonization technologies.
  • Made history with the departure of the "Flight for the Planet," the most eco-friendly commercial flight of its kind in the history of aviation.
  • Renewed contract with Boston-based World Energy to purchase up to 10 million gallons of cost-competitive, commercial-scale, sustainable aviation biofuel.
  • Launched Her Art Here, a contest where two women artists were chosen to have their work painted on California- and New York/New Jersey-themed Boeing 757s to uplift underrepresented women artists.
  • Celebrated Women in Aviation International's annual Girls in Aviation Day by hosting more than 500 girls in 14 locations around the world.
  • Became the first public company to be inducted into Pride Live's Stonewall Ambassador program in recognition of the airline's commitment to LGBTQ+ equality.
  • Reached a milestone of 1 million meals packed for charity partner Rise Against Hunger.
  • Donated $1 million to Feeding America's Shutdown Response Fund to directly support the food banks providing food for families of federal workers.
PDF 8-K, PDF

Links
Q4 / 2019 Full Year presentation link
Q4 / 2019 Full Year call transcript link
Q4 / 2019 Full Year webcast recording link

Q4 / 2019 Full Year 10-Q

Investor Update -- 21 Jan 2020

Past reports
United Airlines Reports Third-Quarter 2019 Performance & Earnings Call 16 Oct 2019
UA Q4/Full Year 2018 Results/Conference Call 16 Jan 2019

Last edited by WineCountryUA; Jan 22, 20 at 6:11 pm
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Old Jan 21, 20, 3:22 pm
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United Airlines to Hold Live Webcast of Fourth-Quarter and Full-Year 2019 Financial Results

January 07, 2020

CHICAGO, Jan. 7, 2020 /PRNewswire/ -- United Airlines will hold a conference call to discuss fourth-quarter and full-year 2019 financial results on Wednesday, January 22, 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 2019 financial results and first-quarter 2020 investor update after market close on Tuesday, January 21.

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 2019, the company expects to record a special non-cash impairment charge of $90 million associated with its Hong Kong routes. The company conducted its annual impairment review of intangible assets in the fourth quarter of 2019, 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 a decrease in demand for the Hong Kong market and the resulting decrease in unit revenue, the company determined that the value of its Hong Kong routes had been fully impaired. Notwithstanding such impairments, the collateral pledged under the company's term loan continues to be sufficient to satisfy the loan covenants.

Last edited by WineCountryUA; Jan 21, 20 at 3:41 pm
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Old Jan 22, 20, 10:59 am
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United's 4th Quarter / Full Year 2019 Numbers Are Out

https://hub.united.com/2020-01-21-un...644883756.html
  • Reported fourth quarter net income of $641 million, diluted EPS of $2.53, up 50% versus the fourth quarter of 2018, pre-tax earnings of $844 million and pre-tax margin of 7.8 percent, expanding pre-tax margin 2.5 points versus the fourth quarter of 2018.
  • Reported fourth quarter adjusted net income of $676 million, adjusted diluted EPS of $2.67, up 11% versus the fourth quarter of 2018, adjusted pre-tax earnings of $889 million and adjusted pre-tax margin of 8.2 percent, expanding adjusted pre-tax margin 0.5 points versus the fourth quarter of 2018.1
  • Reported full year net income of $3.0 billion, diluted EPS of $11.58, up 51% versus full year 2018, pre-tax earnings of $3.9 billion and pre-tax margin of 9.0 percent, expanding pre-tax margin 2.6 points versus full year 2018.
  • Reported full year adjusted net income of $3.1 billion, adjusted diluted EPS of $12.05, up 32% versus full year 2018, adjusted pre-tax earnings of $4.1 billion and adjusted pre-tax margin of 9.4 percent, expanding adjusted pre-tax margin 1.7 points versus full year 2018.1
  • Consolidated fourth quarter passenger revenue per available seat mile (PRASM) increased 0.8 percent year-over-year.
  • Consolidated fourth quarter unit cost per available seat mile (CASM) decreased 1.3 percent year-over-year and consolidated full year unit cost per available seat mile (CASM) decreased 1.2 percent year-over-year.
  • Consolidated fourth quarter CASM, excluding special charges, third party business expenses, fuel and profit sharing, increased 2.7 percent year-over-year. Consolidated full year CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.0 percent year-over-year.
  • Repurchased $216 million of its common shares in the fourth quarter of 2019, at an average purchase price of $88.95 per share, bringing share repurchases for full year 2019 to $1.6 billion.

Based on the numbers, it seems not many FT'ers defected away from United like they threatened to do all year long. Maybe in 2020?
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Old Jan 22, 20, 12:36 pm
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A few notes from the call:

- Would like to deliver free domestic wifi once the technology (bandwidth) is there; Wifi use is up 40%+ this year due to reliability improvements
- Streaming IFE, refreshed interiors coming to 50-seaters (but no wifi?)
- New bins for 1:1 pax/overhead bag ratio coming to NB fleet
- US point of sale to EU is strong, Germany rebounding, deployment of 76L to LHR has been successful
- HKG is still weak but not a major drag on PRASM, PEK/PVG also weaker, rest of Asia doing well (SIN/TPE/Japan)
- Latin America is strengthening
- Sunday after Thanksgiving 2019 was United's "best day ever"
- UA needed larger J cabins and smaller Y cabins in its international network, 20%+ more J will be deployed in TATL region this year
- Polaris 788 lower J/Y ratio is designed to be deployed in leisure-oriented markets, only 12 frames, all other fleets keeping J cabins same size or larger
- Premium Plus is not cannibalizing J demand, outperforming projections, contributing to PRASM tailwind
- CRJ-550 is highest-scoring small aircraft in CS surveys, claimed to be exceeding expectations
- Not expecting 737MAX back until after summer peak
- IAD Polaris Lounge to open this Spring
- Summer 2020 schedule is built with expectation that all 777-222ER (sUA) will have Polaris interiors, 90% of WB fleet converted by YE
- All WB except 14 30J 763 (76A) will have Premium Plus
- UA is trying to accomplish its mid-continent upgauge/growth strategy, but that is difficult without MAX capacity
- Return of MAX fleet will contribute to reduction in operating CASM
- Kirby acknowledges there is a "large" and growing segment of passengers who are brand-loyal, will pay a premium to fly a brand/product they want
- Nocella estimated that as much as 50% of UA premier/CC members are in non-hub zip codes, but I suspect that's high and he was caught off-guard by the question

Notably, for 2020 and beyond, UA will no longer issue quarterly capacity guidance, and will manage capacity based on what it needs to hit EPS targets of $11-13/share. That tells me without the MAX, UA is just about out of options for 4-6% annual capacity growth, and needs to start shifting its focus to narrowbody fleet renewal. I would expect capacity therefore to return to more modest growth, closer to GDP. I'm sure there were some things I missed as I was somewhat preoccupied.
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Old Jan 22, 20, 12:43 pm
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Did not attend the call but the highlight in reading the presentation
Expect ~90% of widebody aircraft will have Polaris seats by year-end 2020
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Old Jan 22, 20, 1:42 pm
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Do the notes about widebodies with Polaris and PremiumPlus include the domestic 777s, or are they just referring to international planes?
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Old Jan 22, 20, 1:47 pm
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Originally Posted by rmadisonwi View Post
Do the notes about widebodies with Polaris and PremiumPlus include the domestic 777s, or are they just referring to international planes?
Believe the Hawaii high density 777-200 (77G) will not have all aisle access premium seats (Polaris) nor PremiumPlus (in the foreseeable future)
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Old Jan 22, 20, 2:00 pm
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Originally Posted by seat38a View Post
Based on the numbers, it seems not many FT'ers defected away from United like they threatened to do all year long. Maybe in 2020?
Don't understand this comment. Any "booking away" factor based on the new 2020 qualifying standards would not show up until Q1 2020 numbers are released, at the earliest.

In the current economic environment, I would not expect a material impact in any event.
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Old Jan 22, 20, 3:37 pm
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I have a hard time with the MAX impact, its 14 planes out of 800 mainline, plus 15 deliveries were scheduled for 2020. As far as i know, they have dozens of 73G and 319's inbound, so they should be able to manage domestic capacity thru those.
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Old Jan 22, 20, 4:20 pm
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Originally Posted by entropy View Post
I have a hard time with the MAX impact, its 14 planes out of 800 mainline, plus 15 deliveries were scheduled for 2020. As far as i know, they have dozens of 73G and 319's inbound, so they should be able to manage domestic capacity thru those.
Scapegoat.
Or they are gearing up to gain some leverage over Boeing for future sales negotiations.
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Old Jan 22, 20, 4:56 pm
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Originally Posted by entropy View Post
I have a hard time with the MAX impact, its 14 planes out of 800 mainline, plus 15 deliveries were scheduled for 2020. As far as i know, they have dozens of 73G and 319's inbound, so they should be able to manage domestic capacity thru those.
Those numbers are a bit off... UA took delivery of 14 before and shortly after the grounding, and expected to have 30 in service by YE 2019. 28 were scheduled for delivery in 2020. 58 170+ seat frames is nothing to sneeze at, even if UA never formally scheduled most of them. UA has a little over 2 dozen 73G and 319 coming in 2020, all of which were planned before the MAX debacle (in other words, they weren't ordered to cover for the loss of the MAX capacity). Even if they were intended as replacements, the 319/73G have 30-40 fewer seats per ship, so there would still be a considerable shortfall.

By the time the MAX reenters service, but for the grounding, UA would have around 50 MAX9 and MAX10 in service, plus all of the 73G/319 deliveries.

United is attempting to close the gap in a few ways:
- postpone retirement of certain older aircraft (319, 320, 757), increasing maintenance and operating costs versus more fuel-efficient new models
- redeploy widebodies on domestic flying (increases maintenance costs for additional cycles)
- increase utilization of existing fleet (increasing maintenance costs)
- pause upgauging strategy at mid-continent hubs (reduces pax volume and weakens connectivity strategy)
- rely more heavily on regional, specifically 50-seat capacity that would otherwise have been drawn down (high cost)
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Old Jan 22, 20, 11:43 pm
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Originally Posted by EWR764 View Post
- All WB except 14 30J 763 (76A) will have Premium Plus.
I would imagine this relates to the 763 & 777s fleet.
I doubt all existing 788s and 789s will be converted.
Same for the 764 fleet.

Thanks for all the details you were able to pick up, EWR764!
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Old Jan 22, 20, 11:56 pm
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Originally Posted by cesco.g View Post
,,,, I doubt all existing 788s and 789s will be converted. ....
Beleive it has been stated PP will be added as a part of conversion to the newer Polaris seat
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Old Jan 23, 20, 12:04 am
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Originally Posted by WineCountryUA View Post
Beleive it has been stated PP will be added as a part of conversion to the newer Polaris seat
indeed - which would mean all 788s, 789s and 764s would be converted to true Polaris by this summer ...... !???!
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Old Jan 23, 20, 12:04 am
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Once again, the only positive thing they could come up with relative to on-time performance:

"Number one in on-time departures at all hubs with direct competitors -- Chicago, Denver and Los Angeles."
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