UAL beats expectations. Tops analysts forecasts.

[767jetz]

2Q estimate for UA blows away "analysts" expectations.

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[donttouchthebeauty]

2Q estimate for UA blows away "analysts" expectations.

See articles here:

AP

Market Watch

The Street

PR Newswire

Great job UAUA and all the employees who made it happen!!

 

[Pragmatic]

Great job UAUA and all the employees who made it happen!!

"Blow-away" is an exageration. They did beat the analysts expectations but are still below the levels of profits reported by CO, WN, and AA (so far).

 

[jbguppy]

"Blow-away" is an exageration. They did beat the analysts expectations but are still below the levels of profits reported by CO, WN, and AA (so far).

A true statement and it shows why UAL is still drastically cutting costs.

We still have more cost cuts that will hit the bottom line well into 2007. The labor agreements are in place until 2009 (much to my chagrin), and we continue to look for every way to be more efficient. Proportionately, I believe we should have profited about 220-240 mil to be equal to CAL and AMR so we still have some work to do.

Our cost numbers will continue to be very competitive and improve ex-fuel and compared to the competition. I look forward to the full results next Monday.

All in all, very encouraging numbers.


JBG

 

[Pragmatic]

It is good to be an optimist. But the problem is:

Baggaley noted, however, that while United's passenger revenue per available seat mile was comparable to American's, its operating cost per available seat mile of 11.43 cents was higher than American's 10.88 cents.

After all, UA went through bankrupcy. How can it's CASM be higher than AA?

 

[UnitedChicago]

It is good to be an optimist. But the problem is:

Baggaley noted, however, that while United's passenger revenue per available seat mile was comparable to American's, its operating cost per available seat mile of 11.43 cents was higher than American's 10.88 cents.

After all, UA went through bankruptcy. How can it's CASM be higher than AA?

EXACTLY

Don't get me wrong - the old timers here know I'm very loyal to United and to her great people.

However, it is way past time to dump this lame management team being lead by Tilton who's only proven skill is to hire the best bankruptcy attorneys money can buy.

I know many of you will point to the continued cost cutting, blah blah blah. Why are they only now starting to cut non-labor?

IT'S TIME FOR NEW LEADERSHIP

 

[FWAAA]

It is good to be an optimist. But the problem is:

Baggaley noted, however, that while United's passenger revenue per available seat mile was comparable to American's, its operating cost per available seat mile of 11.43 cents was higher than American's 10.88 cents.

After all, UA went through bankrupcy. How can it's CASM be higher than AA?

Economy Plus.

E+ contributes to too few seats to sell, just like MRTC did at American.

I was a huge fan of MRTC, but the economics that killed it will eventually doom E+ as well.

 

[jbguppy]

It is good to be an optimist. But the problem is:

Baggaley noted, however, that while United's passenger revenue per available seat mile was comparable to American's, its operating cost per available seat mile of 11.43 cents was higher than American's 10.88 cents.

After all, UA went through bankrupcy. How can it's CASM be higher than AA?

Economy plus greatly biases this metric in Favor of AA. UAL has essentially taken out about 25 narrow body airplanes with the removal of aircraft seats, therefore ASM's.

I have been told before that if we put the seats back in it would lower CASM by about half a cent.

JBG

 

[767jetz]

"Blow-away" is an exageration. They did beat the analysts expectations but are still below the levels of profits reported by CO, WN, and AA (so far).

I never said that there isn't much room for further improvement.

I said we blew away the expectation, and we did. Analysts predicted anwhere from ZERO to 46 cents per share. At 93 cents we more than doubled even their most optimistic prediction.

This just goes to prove once again how the "analysts" of UA are consistently wrong.

 

[scuba]

Well done! Contrats to all those who made it happen. Best of luck going forward.

 

[The Gopher]

On the other side of CASM is RASM. Oh yes, the great "R" of REVENUE. There is more potential locked up in this at UA than most other carriers, we have things that are worth more to the customer experience.

We do need some work on costs, but the great thing is that our yield and revenue potential is greater than our cost-cutting potential. In fact, the revenue gains have outpaced the fuel cost gains lately, witness the fact we reported a profit at all. This is aimed at you "But... but they planned on $50/bbl oil!!!" Yes oil went up from the POR... but so did revenue. Way up.

So UA reforcasts after this quarter, and our fuel and revenue forcasts can be realigned with reality. End result is that we're already there, and can generate an honest-to-goodness profit from that.

 

[USA320Pilot]

Lehman Brothers Investment Report

Raising UAUA estimates on better cost

We believe UAUA shares offer a relatively attractive risk-reward profile, particularly given the potential we see at the company for further cost reductions. Today's pre-release of 2Q points to better cost performance, but company has further potential for cost reduction, in our view.

* 2Q better than anticipated at $1.08 versus our $0.65 and consensus $0.46. Surprise to us divided equally between costs and revenue.

* Mainline/other revenue better, but no changes to rev assumptions beyond 2Q until we have more color. Regional revs spot on our estimates.

* Non-fuel costs also better (fuel actually a touch higher) and guidance suggests positive trends will continue remainder of the year.

* Cost now look much closer to our original assumptions excluding some non-cash and timing issues on equity comp, etc. We see much further potential along these lines.

* Revise upward 2H06 and 2007 to reflect lower cost guidance ('07 moves up less given prior cost reduction assumptions). No change to revs in advance of full release (7/31). Some offset in additional share count from converts (4-5 mm shares).
____________________

"Obviously it represents a significant improvement," said Philip Baggaley, airline analyst for Standard & Poor's Corp. "The earnings are not quite as strong as those reported by AMR or Continental (but) they point out a number of items that they characterize as unusual or non-recurring." Baggaley noted, however, that while United's passenger revenue per available seat mile was comparable to American's, its operating cost per available seat mile of 11.43 cents was higher than American's 10.88 cents.

Calyon Securities analyst Ray Neidl said the projected profit was "not that great." "If they couldn't make a profit this quarter, then they had some real problems," he said. "United still has some work to do in cutting their (non-labor) costs."

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United CEO Glenn Tilton lauded the company's restructuring, revenue growth and cost controls. "We are making good progress in strengthening our core business," he said.

Analyst Ray Neidl of Calyon Securities said United's operating profit margin was lower than Continental's 7% and American parent AMR's 8% in the second quarter, but "at least they are moving in the right direction."

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Credit Suisse analyst Daniel McKenzie maintained a "neutral" rating on the stock, but said his $35 price target factors in an improving outlook for UAL, which reports second-quarter results July 31. "UAL's news [is] welcome and bodes well for carriers' continued turn around," McKenzie wrote in a report released to investors Monday.

"Both industry and UAL fundamentals are improving, which should lift UAL shares," he added.

But while UAL is a "nice turnaround story," McKenzie said his top picks in the industry remain US Airways, AMR, JetBlue, and AirTran. UAL still needs to focus on capacity discipline and won't likely outperform the sector.

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USA320Pilot comments: It’s great to see United post a stronger than expected profit. Interestingly, Credit Suisse Airline Analyst Dan McKenzie has two “so calledâ€￾ legacy and two “so calledâ€￾ low cost carrier’s as his top picks.

Best regards,

USA320Pilot

 

[spacewaitress]

WOW!! UA is doing something right apparently. Now all they need is a management/corporate philosophy that can translate into unlocking all the pent-up potential of the great people at this airline that made this happen. We all gave it our best so far...let's see a management (current of future) that sincerely appreciates that and is able to tap into the great energy and spirit of the people at this airline.

 

[JAMAKE1]

WOW!! UA is doing something right apparently. Now all they need is a management/corporate philosophy that can translate into unlocking all the pent-up potential of the great people at this airline that made this happen. We all gave it our best so far...let's see a management (current of future) that sincerely appreciates that and is able to tap into the great energy and spirit of the people at this airline.

Space:

I wholeheartedly agree with you. Very well stated.

 

[Andre1980]

I am not impressed about those numbers especially when compared to AMR and CAL. Ual management needs to emulate AMR and CAL stragtegies of simplifying their operations to cut costs. UAL have Ted, P.S service, regular United service and similar aircraft with different layouts and by doing this it costs them money. All Ual management seem to do is complain about their labour costs and here we have it that AMR that has a higher labour cost is doing better than UAL. I think UA's mangement team need to be forced out by the unions and shareholders. They already get too much compensation when compared to their competitors and have not shown anything substantial to justify their worth.