United Reports March 2004 Traffic Results

[Cosmo]

Earlier today, United reported its March 2004 traffic results. In addition to an average system load factor of 80.1% (up 6.4 percentage points), the carrier showed large increases in international RPMs, up 20.2% across the Pacific and up 15.7% across the Atlantic during the month, with little corresponding growth in international ASMs. This international RPM growth caused United's Pacific load factor to soar by 16.0 points to 86.5% and its Atlantic load factor to improve by 10.9 points to 84.1%. Even Latin American operations, with much smaller RPM growth, had a monthly load factor of 79.9%. If United can achieve a year-over-year RASM increase similar to that recorded in February 2004 (about 12%), which should be possible given the impacts of the Iraq war and SARS on traffic and revenues in March 2003, then United's monthly financial results in March 2004 are likely to be much better than those seen in January and February of this year. We should know in roughly three weeks.

You can read United's March 2004 traffic press release here.

 

[mweiss]

80% LF is mighty impressive.

 

[BigRed1]

Can any one tell me what kind of load factor UAL needs to break even? I know with higher fuel prices these days this number can vary. I think I remember hearing that the break even load factor during our darker years just prior to the BK was around 89%. I am sure it it much more reasonable now. Perhaps around 78-80%.

As a side note...I was in LGA last weekend, and not a single non-revenue standby got on a flight to ORD Friday, Saturday, and Sunday. As I waited for my seat that never materialized, I observed some involuntary denied boardings. DEN and IAD were also full. I ended up having to drive to HPN and fly out the next morning to get out of New York.

Granted, this is a big Spring Break weekend with people returning and starting their breaks, but if this is any indication of what is in store for us this summer, UGH. I can see why UAL and the other carriers are adding a lot of flights. Ready yourselves for gridlock. It still amazes me the airlines' lack of pricing power when I see chaos like this at the airports. What is 5 or 10 more bucks on average per ticket to add a few million dollars a day to our bottom line at the expense of a few less passengers? I guess I need to go take an airline revenue management 101 course to figure out the logic.

United is running on razor thin manpower models at least when it comes to pilots for the summer. Any other workgroups getting strained as well? Any rumors of any more recalls coming for pilots, flight attendants or mechanics?

Thanks for reading.

 

[Imagolfer]

Remember, High Load Factors do not equal profitibility. UA has a LONG way to go 😉

 

[FWAAA]

Can any one tell me what kind of load factor UAL needs to break even? I know with higher fuel prices these days this number can vary. I think I remember hearing that the break even load factor during our darker years just prior to the BK was around 89%. I am sure it it much more reasonable now. Perhaps around 78-80%.

It still amazes me the airlines' lack of pricing power when I see chaos like this at the airports. What is 5 or 10 more bucks on average per ticket to add a few million dollars a day to our bottom line at the expense of a few less passengers? I guess I need to go take an airline revenue management 101 course to figure out the logic.

Depends on how many of the backpackers and flipflop crowd would fly someone else for the $5 or $10 you propose.

Even at today's giveaway prices, UAL only filled 80% of its seats in March. Impressive, but probably not profitable.

 

[iflyjetz]

At that high of a LF in the spring, UAL will need to add capacity for the summer. It'll be interesting to see if they start recalling pilots soon; they're currently squeezing just about every hour out of the pilots still on property.
With 2172 pilots on furlough (approx 25% of the seniority list), I'd like to see UALALPA push for some recalls going into the summer months.

 

[Cosmo]

A further indication of how well United performed traffic-wise in March ...

In this press release issued today regarding this morning's start of Ted service at IAD, United showed how good the Ted load factors have been during its first two months of existence. According to the press release:

In fact, Ted has been extremely well-received by customers in its first two months of flying, filling 82 percent of seats for February and 89 percent for March.

Now, a monthly load factor of 89% is a pretty good accomplishment, notwithstanding the fact that it is still just a very small part of United's system operations. However, the most pertinent question is -- even at that relatively high load factor, is the Ted operation profitable? I certainly don't know the answer to that question, and I'm sure it's not public information. But I assume the folks at United's HQ know the answer, and hopefully it's positive, because if Ted isn't profitable fairly soon, especially at those kinds of load factors, it could very well become a drag on United's efforts to emerge from Chapter 11.

 

[N230UA]

However, the most pertinent question is -- even at that relatively high load factor, is the Ted operation profitable?

The official plan was for Ted to show a profit in 2005.

However, this could be a PR strategy of "underpromise overdeliver".

 

[Ukridge]

Cosmo, Are there working limitations when an airline reaches high load factors? That is to say, I am sure that every airline would wish to have every seat filled on every flight - 100% for the day. However, is that possible? Apart from all the 'lean' and 'just in time' developments in production control over the years, many firms have realized that there needs to be just a little 'wiggle' room at, or near, full capacity. Perhaps this is not the case in this industry and my viewing of a filled aircraft is not the same as production capacity.
It would intuitively seem that at 100% there would be be no slack room to adjust for any problems. Yet again though, maybe the problems that do arise are not solved through simply extra capacity anyway. Seems to be rather a question of what theoretical load factor can the airline consistently operate effeciently and profitably?
Cheers

 

[Bear96]

Cosmo, Are there working limitations when an airline reaches high load factors? That is to say, I am sure that every airline would wish to have every seat filled on every flight - 100% for the day. However, is that possible? Apart from all the 'lean' and 'just in time' developments in production control over the years, many firms have realized that there needs to be just a little 'wiggle' room at, or near, full capacity. Perhaps this is not the case in this industry and my viewing of a filled aircraft is not the same as production capacity.
It would intuitively seem that at 100% there would be be no slack room to adjust for any problems. Yet again though, maybe the problems that do arise are not solved through simply extra capacity anyway. Seems to be rather a question of what theoretical load factor can the airline consistently operate effeciently and profitably?
Cheers

I think a general rule of thumb is once you get too high up into the 80s (%) on a system-wide basis there start to be lots of problems with invountary denied boardings and major problems when there are operational difficulties (weather, etc.).

 

[N230UA]

Cosmo, Are there working limitations when an airline reaches high load factors? That is to say, I am sure that every airline would wish to have every seat filled on every flight - 100% for the day. However, is that possible? Apart from all the 'lean' and 'just in time' developments in production control over the years, many firms have realized that there needs to be just a little 'wiggle' room at, or near, full capacity. Perhaps this is not the case in this industry and my viewing of a filled aircraft is not the same as production capacity.
It would intuitively seem that at 100% there would be be no slack room to adjust for any problems. Yet again though, maybe the problems that do arise are not solved through simply extra capacity anyway. Seems to be rather a question of what theoretical load factor can the airline consistently operate effeciently and profitably?
Cheers

I think a general rule of thumb is once you get too high up into the 80s (%) on a system-wide basis there start to be lots of problems with invountary denied boardings and major problems when there are operational difficulties (weather, etc.).

Unless you don't overbook like jetBlue, of course.

B6 amazingly runs 85-90% LFs consistently, yet has among the best baggage handling rates. And obviusly 99.9% they are able to not oversell their flights, so VDBs and IDBs are rare.

The .1% stems from irregular operations...

And of course, B6 is still a sub 100-jet airline... for now. By 2011 it will have nearly 300 aircraft.