United loses $542 million in 1Q 2008 [Merged Threads]
Apr 23, 2008 | 10:39 am
#106
Join Date: Dec 2007
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Cherry picking. ORD-MCO is not quite DENRNO. 1 is full all of the time, at a high density configuration.
To compare OORD-DDFW, whihc is not UA's strength (I believe it is a hub-hub route for a major competitor) is nowhere near the same. I would be more than willing to bet that the ORD-MCO run brings in on average, at least 1.5, maybe 2x as much as the AVERAGE ORD-DFW run. ORD-LAS would be similar as full, and reasonable fares. And guess what? The liability of MP miles on ORD-MCO is low too (small point) as few people of status getting multipliers, and no class of service multiplier.
The RNO runs you mention may better be suited for an RJ, not an A320, as the LoH is so short, but the useage of the aircraft is pretty good, in terms of cycles/day.
Ted on the longer routes just needs to either add seats (eliminate econ plus?) or remove 6 to either better utilize the 4th SW, or get under 151 passengers to only require 3.
Let's see....foreign travelers (presumably a higher yield) want to see Mickey Mouse or Las Vegas. And Ted doesn't have any advantages? Most foreign travelers are NOT us brand loyal. Might as well get as many of them on a small plane as possible, than to chase brand loyalty with them, when they will never be loyal to begin with.
To compare OORD-DDFW, whihc is not UA's strength (I believe it is a hub-hub route for a major competitor) is nowhere near the same. I would be more than willing to bet that the ORD-MCO run brings in on average, at least 1.5, maybe 2x as much as the AVERAGE ORD-DFW run. ORD-LAS would be similar as full, and reasonable fares. And guess what? The liability of MP miles on ORD-MCO is low too (small point) as few people of status getting multipliers, and no class of service multiplier.
The RNO runs you mention may better be suited for an RJ, not an A320, as the LoH is so short, but the useage of the aircraft is pretty good, in terms of cycles/day.
Ted on the longer routes just needs to either add seats (eliminate econ plus?) or remove 6 to either better utilize the 4th SW, or get under 151 passengers to only require 3.
Let's see....foreign travelers (presumably a higher yield) want to see Mickey Mouse or Las Vegas. And Ted doesn't have any advantages? Most foreign travelers are NOT us brand loyal. Might as well get as many of them on a small plane as possible, than to chase brand loyalty with them, when they will never be loyal to begin with.
So the question becomes what's important? Reducing sub fleets and thus reducing costs? Remember Ted not only complicates UA's fleet planning but also demands massive advertising investments to build and maintain a separate brand image (we are talking millions per year). Furthermore, since you are connecting passengers onto Ted; wouldn't consistent branding that doesn't confuse the consumer and/or enrage your best customers (no first class etc.) be a good idea? Of course it is if your United, apparently.
I'm not arguing that UA shouldn't serve ORD-MCO. There is probably a singificant amount of traffic on that route. What I'm suggesting is that they would be better off serving it with mainline service instead of Ted.
Apr 23, 2008 | 11:38 am
#107
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On a side topic, I hate to even think of the possibility, but just out of speculation, if UA were to suddenly fold, what would you immediately do with your hundreds of thousands of UA miles (assuming they were about to be lost)? Would you cash in for some merchandise or tons of hotel vouchers, or what? Just imagining a backup plan in case of the unthinkable...
Account balance today: 990
Revenue ticket dollars saved (approx) $7,250 (net of $250 in purchased miles). Saving $$ was the motivation pure and simple though.
But all the burnage this year is for others; I'll be 1P again with 2 transpacs in June/July.
Apr 23, 2008 | 11:40 am
#108
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Why bother when TED loads are high and they can continue to crank up fares? Sure they'll lose out on a handful of F revenue tickets. Beyond that what is the difference?
Apr 23, 2008 | 12:07 pm
#109
Join Date: Dec 2004
Location: CAE to PER
Programs: UA 2P, Nat'l Executive
Posts: 152
Ted does nothing to enhance revenues and only increases costs at United. It forces UA to compete on low profit, price sensitive, zero margin routes where customers have exactly zero brand loyalty. When you have some of your newest planes in the fleet, configured in an asinine seating which increases costs (extra FA), creating a separate subfleet which reduces planning flexibility. Simply brilliant.
Apr 23, 2008 | 12:14 pm
#110
Join Date: Jun 2006
Location: Asia
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Posts: 885
On a side topic, I hate to even think of the possibility, but just out of speculation, if UA were to suddenly fold, what would you immediately do with your hundreds of thousands of UA miles (assuming they were about to be lost)? Would you cash in for some merchandise or tons of hotel vouchers, or what? Just imagining a backup plan in case of the unthinkable...
If I use miles today to book and award on another *A carrier would those tickets be honored if UAUA went under before the flight?
Apr 23, 2008 | 1:11 pm
#111
Join Date: Sep 2001
Location: LAX CA
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Posts: 2,537
United reports quarterly loss, plans cutbacks
CHICAGO Soaring fuel costs. Flights cut. Jobs lost.
The parent company of United Airlines reported a worse-than-expected quarterly loss Tuesday, citing a string of problems that are hurting other carriers as well. And for travelers, a vacation season of jammed planes, delayed flights and higher fares looms in what's shaping up as the worst of times for both airlines and their customers.
"It's going to be a rough summer," said Terry Trippler, a Minneapolis-based travel expert. "It's going to be one where you've got to plan another day into your travel schedule" just to prepare for schedule chaos.
Months of rising concerns about the consequences of higher fuel prices jumped to new levels of anxiety among investors on a gloomy combination of developments that sent UAL Corp. shares down a staggering 35 percent and battered other airline stocks.
Not only did United post a $537 million first-quarter loss and announce cutbacks accordingly, crude oil surged near the once-unthinkable $120-a-barrel mark and Delta Air Lines Inc. CEO Richard Anderson said domestic carriers would need to raise fares by 15 percent to 20 percent just to break even.
Increases might not fly
With weaker demand because of the economy, cutbacks in corporate travel and likely "sticker shock" among consumers, it's not clear whether the airlines can accomplish such increases. Airlines have tried to raise ticket prices a dozen times across most of their route networks since the start of the year, but four such attempts were rolled back after competitors refused to join in.
Anderson said higher fares likely would diminish demand and prompt carriers to further reduce schedules.
"We've got an industry that's in trouble," said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. "If oil prices stay anywhere near $100, $120 for the year ... we'll have a massive restructuring of the airline industry."
http://www.venturacountystar.com/new...lans-cutbacks/
The parent company of United Airlines reported a worse-than-expected quarterly loss Tuesday, citing a string of problems that are hurting other carriers as well. And for travelers, a vacation season of jammed planes, delayed flights and higher fares looms in what's shaping up as the worst of times for both airlines and their customers.
"It's going to be a rough summer," said Terry Trippler, a Minneapolis-based travel expert. "It's going to be one where you've got to plan another day into your travel schedule" just to prepare for schedule chaos.
Months of rising concerns about the consequences of higher fuel prices jumped to new levels of anxiety among investors on a gloomy combination of developments that sent UAL Corp. shares down a staggering 35 percent and battered other airline stocks.
Not only did United post a $537 million first-quarter loss and announce cutbacks accordingly, crude oil surged near the once-unthinkable $120-a-barrel mark and Delta Air Lines Inc. CEO Richard Anderson said domestic carriers would need to raise fares by 15 percent to 20 percent just to break even.
Increases might not fly
With weaker demand because of the economy, cutbacks in corporate travel and likely "sticker shock" among consumers, it's not clear whether the airlines can accomplish such increases. Airlines have tried to raise ticket prices a dozen times across most of their route networks since the start of the year, but four such attempts were rolled back after competitors refused to join in.
Anderson said higher fares likely would diminish demand and prompt carriers to further reduce schedules.
"We've got an industry that's in trouble," said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. "If oil prices stay anywhere near $100, $120 for the year ... we'll have a massive restructuring of the airline industry."
http://www.venturacountystar.com/new...lans-cutbacks/
Apr 23, 2008 | 1:14 pm
#112
Join Date: Apr 2005
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Yep... one of the most active threads the last 2 days:
http://www.flyertalk.com/forum/showthread.php?t=815850
http://www.flyertalk.com/forum/showthread.php?t=815850
Apr 23, 2008 | 1:22 pm
#113
Join Date: Apr 2005
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I promised a link to the conf call transcript once it became available....
http://seekingalpha.com/article/7344...all-transcript
http://seekingalpha.com/article/7344...all-transcript
Apr 23, 2008 | 1:40 pm
#114
Join Date: Feb 2007
Location: New York, NY
Posts: 2,057
my feeling is that they would not be honored, because why would you honor something that is worthless? or why would airlines pay each other before the actual flights? but who knows.
Apr 23, 2008 | 1:42 pm
#115
Join Date: Sep 2001
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Yep... one of the most active threads the last 2 days:
http://www.flyertalk.com/forum/showthread.php?t=815850
http://www.flyertalk.com/forum/showthread.php?t=815850
Apr 23, 2008 | 4:41 pm
#116
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If UA is out of business and can't provide payment after an award flight on a partner, you might just be out of luck. Having said that, I don't think one quarter's results gives you enough information to start worrying about the demise of this airline.
Apr 23, 2008 | 4:44 pm
#117
Suspended
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Has anyone done a good analysis of the comparison between the loss by UA and the losses by Delta/Northwest?
Apr 23, 2008 | 6:03 pm
#118
Join Date: Jul 2004
Location: CT
Programs: UA1K
Posts: 351
Code:
Q1 Q2 Q3 Q4 07' Q1/08 UA (92) 537 658 (64) 1039 (441) AA 248 467 319 (69) 965 (187) DL 155 490 453 (2) 1096 (161) NW 201 357 459 87 1104 (119) CO 64 263 280 80 687 (66) US 116 289 202 (74) 533
At least wait until the summer is over.
Apr 23, 2008 | 6:17 pm
#119
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Location: PIT
Posts: 14,665
Not that bad.....
And in other news Jane....WN just reported its 69th consecutive PROFITABLE quarter despite soaring oil prices.
.
Apr 23, 2008 | 6:47 pm
#120
Join Date: Mar 2001
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Programs: WN CP & B-list. Using UA more these days. Former:F9-Ascent AA-Plat CO-Gold TWA-Elite
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And so they raised the change fee from $100 to $150? Don't the realize that this is what is driving all of their customers, especially on the TED routes over to Southwest?
I don't even check United anymore when booking DEN-LAS. I just book Southwest. Even if it is $10 or $20 cheaper, the change fee alone is enough of a reason to stay with Southwest, and now a 50% stronger reason with the increase in change fees.
If they lose $750 million in the next quarter, might they not try decreasing the change fee to $50. Then they'd lose only $250 million, which might lead them to the conclusion that they'd break even if they had NO change fee.
Meanwhile, Southwest creates the "A-list" to reward frequent flyers with automatic check-in and virtually always an "A" seat, a benefit that far exceeds United Premier.
I don't even check United anymore when booking DEN-LAS. I just book Southwest. Even if it is $10 or $20 cheaper, the change fee alone is enough of a reason to stay with Southwest, and now a 50% stronger reason with the increase in change fees.
If they lose $750 million in the next quarter, might they not try decreasing the change fee to $50. Then they'd lose only $250 million, which might lead them to the conclusion that they'd break even if they had NO change fee.
Meanwhile, Southwest creates the "A-list" to reward frequent flyers with automatic check-in and virtually always an "A" seat, a benefit that far exceeds United Premier.