Second Qtr Results. Keep up the good work!

[ual747mech]

Don't worry folks!!

The bottom line is this:

Reports Positive Operating Cash Flow and Cash Position Improves Significantly
Meets DIP Covenant Requirements for June
Unit Costs Significantly Improved
Salaries and Related Costs Down $543 Million
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Now let's analyse the 2nd quarter result.

Financial Results

UAL's second quarter 2003 operating revenues were $3.1 billion, down 18% compared to second quarter 2002. Passenger revenue for the quarter was down 18% from last year on a 14% decrease in capacity. System passenger unit revenue was 4% lower on a 7% yield decline and a 2.6 point increase in load factor. Traffic decreased 11% year-over-year. United's load factor for the quarter was 77%.

(Bad news. This result is due to the war in Iraq and especially the Sars outbreak in Asia, our bread and butter. Now that the war and Sars epidemic is pretty much over, the load has increased big time, especially in the Asian routes)

United's operating expenses for the quarter were $3.5 billion, down 17% from the same quarter last year. While the Company's unit cost (operating expenses per available seat mile) decreased 3%, excluding its fuel subsidiary and special items, unit cost decreased 6% year-over-year. This unit cost improvement was among the best in the industry.

(Good news. Bankruptcy expenses and rising fuel cost hurt us though,)

Salaries and related costs decreased $543 million or 30% for the quarter. This amount reflects the dramatic reduction in wages, changes in benefits and changes in work rules and productivity improvement associated with United's new collective bargaining agreements (CBAs), including a benefit of $102 million for the reversal of accruals as a result of contract renegotiations. While capacity was down for the quarter, productivity was up 9% for the quarter year-over-year and in June improved 12% over June 2002.

(Bad news, paycut sucks , Actually this is good news everybody seems to be pulling together once again.)

Aircraft rent was down $73 million or 35% compared to second quarter 2002. United is still in negotiations with respect to a large number of aircraft in its fleet and further savings are expected to be realized as these negotiations are finalized over the next several months.

(Good news. Now lets get it down to zero like our tax rate )

The Company had an effective tax rate of zero for the second quarter, which makes the Company's pre-tax loss the same as the Company's net loss. In the second quarter of 2002, the Company recorded a credit for income taxes of $191 million.

(Good news. I'd like to know how to get my tax rate down to zero )

 

[FA Mikey]

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On 8/2/2003 10:01:59 AM USFlyer wrote:

Folks -

While I usually avoid getting into the middle of Chip bashing threads, Chip is right in saying the huge loss UAL posted is disappointing. I think everyone was expecting somewhat better results from a carrier that is in Chapter 11 and able to avoid paying certain bills. This also shows how much stronger AA is when compared to UA, and comparing AA and UA is probably a much more valid comparison than US and UA.

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Probably true. But United suffered tremendously due to the SARS scare They have a huge amount of assets and revenue tied to the Pacific rim. They can avoid some bills but still others rear there ugly heads in BK court.

 

[AirlinerMon]

Chiper said:

"I do not want to see UA fail and I post what I believe is accurate information. The UA financial loss was huge by every standard, but this quarter will be a better representation of what the future holds."

Dude, I'm pretty sure that absolutely no one who has read either this board or the US Airways board believes this (except maybe you). I just check in here every once in a while, but your glee in rubbing United proponents' noses in every speck of bad news, much of which is taken out of context by you, borderlines on the surreal. Ditto for your disregard of all good news and obvious positive trends affecting this airline, almost 100% of which you ignore completely, ommitting them from your "analysis" posts as if they don't even exist.

So, for the subject at hand, let's take a closer look. United posted a huge loss, and that sucks big-time. Here are some points you might have overlooked in your in-depth reporting. The beginning of the quarter was a trainwreck for UAL due to the confluence of the effects of SARS and the Iraq war. No other major US airline the cost and revenue exposure in the Pacific region (and really, international flying as a whole) that UAL does. This caused a loss of revenue that amost eclipsed that of the effects of 9/11. The snapshot today? Much, much better. UAL will be returning to a full Pacific schedule by fall, fulling taking advantage of a much stronger revenue environment in that region. I know, I know, US Airways faired magnificantly in the Pacific for that quarter.

No (real) analyst is prediciting UAL having any trouble with it's DIP convenants, which are based upon EBITAR. Most of the factors that contributed to United's loss have nothing to do with EBITAR. Did you see that blurb about being cash-flow positive? Most of what made them cash-flow positive has a lot to do with EBITAR.

And for your analysis of what UAL's loss would be without the gub'ment money:

Chip said: "United Airlines reported a number of unusual one-time items. The net profit (loss) excluding one time items only represent a credit for a $365 IRS tax refund and $300 million in federal aid because the other one-time items were associated with the company’s formal reorganization. Without these two gains, United would have lost $1.096 billion during the second quarter.

You forgot a few things in there, although I liked the nice, big font. It really is more fun with the bold, though. You seem to think that a "correct" analysis should exclude any positive one-time items. Fine. But you still managed to shove in all the special one-time negative items "associated with the company's formal reorganization" If you're really looking to shed light on the true condition of US Airways' "businiess partner" from a complete neutral stance, maybe you'd better take a closer look at how you compute those numbers. If you remove ALL "special" and one-time items, the good and the bad, the number comes to a loss of $476 million. You can't just tinker with the special numbers on one side of the sheet if you're trying to look at this as a true "analyst".

United ain't out of the woods by any means, but all current (that means today, not four months ago) and future indicators look much better, no matter how many out-of-context one-liners you can produce or cryptic meaning you can deduce from three words a CEO has said.

In closing, thank you for posting the financial result comparison of the major airlines on the United board, even though your assumptions that change the UAL numbers (and change them in such a way that no Wall-Street analyst had the thoughfulness to emulate) might be a little faulty. But you might wish to enlighted our friends at the other airlines.....I noticed that you did not make this "informational" post on any of the other airline boards. Just an oversight?

Man, your fuzzy-math and fuzzy-thinking posts, laser-focused on the downside risks of UAL and completely devoid of the upside potential, have truly gone beyond the bizarre.

Best Regards,

AirlinerMon

 

[ual06]

Folks, perhaps we should not be so hard on Chip. It appears he does not want to spend the rest of his working life as an RJ pilot. It appears he is building a portfolio of analyzing UAL to submit along with his resume in hopes of beginning a new career as an "Airlines Analyst". Yes, his approach is hard on UAL employees; but, perhaps we should be tolerant as he
tries to enter a new career to replace the one he made such a blunder on early in his life. Also, what he writes/pastes will actually have no effect on the future of UAL.

 

[AirplaneFan]

At the risk of being painted with the same brush you paint Chip, I have a few questions

1) UAL did alot of good things absolutely..... however, they still lost $623 million dollars. What is the plan to get profitable? UAL is cash flow positive .... that's good if you don't plan on purchasing any more capital.

2) 767jetz you bruskly refuted the 93.7% load factor only to have the original poster cite he got the information right from the UAL press releases. Do you have evidence that backs up your original assertions? You have taken great pains taking Chip to task, but you lose credibility if you are not reading your own companies press releases.

 

[767jetz]

Chip you are really pathetic and in denial about yourself. Do you always blame others for your actions? Ukridge hasn't been on this board for some time, and his sophist comment was weeks ago. I will not blame him for anything. No one dragged you out from under your rock! If you have a beef with Ukridge, then instant message him. If that's the true reason for you being here, then you can now leave.
But you won't because we all know why you are really here. Please take responsibility for you own actions. You're a pilot for Heavens sake!
If you're truly only interested in how UA affects USAir, then save your comments for the US board where people might actually care to hear your negative perspective. As you can tell from other people's comments on the UA board, as well as their action of disappearing out of disgust, no one here is interested in your spin. Let me correct that... MOST people here are not interested in what you have to say.
Actions speak louder than words my friend. If you are sincere in your words, you will go back to your own message board and leave the good folks at UA alone.

 

[ual747mech]

Don't worry folks!!

Once the economy gets in full gear and United is out of bankruptcy, United will be kicking butt again like before. Now let's hope management doesn't squander all that money again, like trying to buy lowly US Air(oops, sorry Chip, no offense but Goodwin and co. was trying to buy your co. for $67 a share, which was overinflated even during that time.

 

[ual747mech]

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On 8/2/2003 12:17:34 PM AirplaneFan wrote:


At the risk of being painted with the same brush you paint Chip, I have a few questions
 
1)  UAL did alot of good things absolutely..... however, they still lost $623 million dollars.  What is the plan  to get profitable?  UAL is cash flow positive .... that's good if you don't plan on purchasing any more capital.
 
2)  767jetz you bruskly refuted the 93.7% load factor only to have the original poster cite he got the information right from the UAL press releases.  Do you have evidence that backs up your original assertions?  You have taken great pains taking Chip to task, but you lose credibility if you are not reading your own companies press releases.

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In order for United to start making big profit once again, the economy has to get better. Even with the current loss, I don't think there's nothing to worry about since our operating cash flow keeps increasing Also, United has met the deptors in possesion requirements for the 5th time so United is actually in pretty good shape.

The load factor of 93.7% necessary to break even is because the company was promoting a big sale, fly 2 get 1 free, to get customers to fly United during the Iraq and Sars outbreak. As the load and ticket price increases and expenses gets lowered etc., the load factor to get even decreases. If you look at the previous quarters the load factor to break even is different from this quarter. I think 767jetz was thinking about previous load factors. So depending on the climate of the market the load factor to break even will either go up or down.

 

[Busdrvr]

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On 8/2/2003 12:17:34 PM AirplaneFan wrote:


At the risk of being painted with the same brush you paint Chip, I have a few questions
 
1)  UAL did alot of good things absolutely..... however, they still lost $623 million dollars.  What is the plan  to get profitable?  UAL is cash flow positive .... that's good if you don't plan on purchasing any more capital.
 
2)  767jetz you bruskly refuted the 93.7% load factor only to have the original poster cite he got the information right from the UAL press releases.  Do you have evidence that backs up your original assertions?  You have taken great pains taking Chip to task, but you lose credibility if you are not reading your own companies press releases.

----------------​

Did you read the financial report? You ask "what's the plan to make UAL profitable." Wellllllll, did you notice that UAL had a operating PROFIT in the month of June? So maybe, UAL needs to continue on it's present course. Make sense? Please explain how previously reported april and may results are even relevent. UAL was PROFITABLE in June, and July's load factors were even higher on more flights (operated by less employees).

BELF of 93.7%? Then how was an operating profit possible for the m,onth of june with much lower load factors? Or did you mean to say the AVERAGE BELF for the first six months was 93.7%? If we are counting past numbers, lets just go back 5 years, then you could say BELF was around 75%. Irrelevent? ABSOLUTELY!! UAL's current OPERATING BELF is in the mid 70's range.

 

[bigbusdrvr]

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On 8/11/2003 7:51:45 AM Busdrvr wrote:

----------------
On 8/2/2003 12:17:34 PM AirplaneFan wrote:


At the risk of being painted with the same brush you paint Chip, I have a few questions
 
1)  UAL did alot of good things absolutely..... however, they still lost $623 million dollars.  What is the plan  to get profitable?  UAL is cash flow positive .... that's good if you don't plan on purchasing any more capital.
 
2)  767jetz you bruskly refuted the 93.7% load factor only to have the original poster cite he got the information right from the UAL press releases.  Do you have evidence that backs up your original assertions?  You have taken great pains taking Chip to task, but you lose credibility if you are not reading your own companies press releases.

----------------​

Did you read the financial report? You ask "what's the plan to make UAL profitable." Wellllllll, did you notice that UAL had a operating PROFIT in the month of June? So maybe, UAL needs to continue on it's present course. Make sense? Please explain how previously reported april and may results are even relevent. UAL was PROFITABLE in June, and July's load factors were even higher on more flights (operated by less employees).

BELF of 93.7%? Then how was an operating profit possible for the m,onth of june with much lower load factors? Or did you mean to say the AVERAGE BELF for the first six months was 93.7%? If we are counting past numbers, lets just go back 5 years, then you could say BELF was around 75%. Irrelevent? ABSOLUTELY!! UAL's current OPERATING BELF is in the mid 70's range.


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Can you reference the article for the mid 70's belf?

 

[Busdrvr]

"Can you reference the article for the mid 70's belf?"

Yes, but it will require a little math on your part. If I just rehahed old news, I'd change my name to Chip. My source is the latest traffic and financial releases from UAL. The second quarter report clearly stated that UAL had an 80 million operating PROFIT for the month of June (annualized that's around 1 billion). Load factor for June was approx 82%. therefore, OPERATING BELF was in the mid 70% range

 

[Bear96]

OK moderators...

We (UA folk) get chastised, posts deleted, little finger-wagging notes in our inboxes telling us to "play nice" if we dare challenge Chip...

But THIS guy (bigbusdrvr) can taunt and be as nasty as s/he wants to with no repercussion???

Help me understand!

 

[Cosmo]

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On 8/11/2003 328 PM bigbusdrvr wrote:

Now what would the BELF be if you were paying long term debt (this might take a little thinking on your part) ie: BILLS
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Actually, IIRC, UA's operating BELF wouldn't change at all because long-term debt is a cash flow item, not an income statement item. Moreover, like the situation with US, I suspect that most, if not all, of UA's pre-bankruptcy long-term debt will either be written off or be exchanged for equity in the post-bankruptcy company.

 

[Fly]

It's sooooo obvious that Chip and his little playmates at USAir own this board. Thank God there are so many decent people at USAir who are totally embarressed by this behavior. Of course, I'm typing this to let of steam, cuz they'll delete it too.

 

[Cosmo]

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On 8/11/2003 314 PM Busdrvr wrote:

The second quarter report clearly stated that UAL had an 80 million operating PROFIT for the month of June (annualized that's around 1 billion). Load factor for June was approx 82%. therefore, OPERATING BELF was in the mid 70% range
----------------​

Busdrvr:

Actually, UA's press release said the company had an operating profit of about $20 million for June, not $80 million as you stated. Given UA's June load factor of just over 82%, that gives an operating BELF of roughly 80-81%. Still, it's a welcome bit of good news for UA.