・UAL reported $684M net income for 2Q18
・Flight attendant groups will integrate in October
・Fuel costs increased 43% ($2.4B YoY)
・United recovered 75% of increased fuel costs
United’s better-than-expected quarterly results
United Airlines parent company United Continental Holdings (UAL) beat analysts’ expectations and reported largely positive second-quarter results today. Phew!
Revenue increased 7.7% to $10.78B, although rising fuel costs led to a 16.7% decrease in net income. Other metrics like PRASM (passenger revenue per available seat mile), increased yield, and strong operational performance recovered 75% of increased fuel costs.
🌟 Check out View From the Wing for Gary’s take
Key metrics show strong results
↑ revenue 7.7% ($10.4B)
↓ net income 16.7% ($6.84M)
↑ passenger revenue in all regions except Latin America
↑ fuel costs 43% ($2.4B)
↑ passengers carried 7.3% (41M)
↑ load factor 1.3 pts (84.8%)
Takeaways from United’s Quarterly Earnings
Industry-leading operational performance
While it’s easy to criticize United’s customer experience, I must commend United for its strong operational performance. A key industry metric for on-time pushback from the gate is D:00, meaning the plane pushed back ‘0’ minutes after scheduled departure time.
United leads the industry at 70%, meaning 70% of flights leave exactly on-time. And check out Southwest: only 46% of flights (!!) pushed back at D:00.
U.S. Airline On-Time Pushback ‘D:00’ | Image: United
Overall passenger revenue (PRASM) is up 3%
🌟 PRASM = passenger revenue per available seat mile
UAL 2Q PRASM | Image: United
Overall PRASM Increased 3% | Image: United
- Domestic-only itineraries outperformed domestic flights feeding an international itinerary・
- United is starting to see premium cabin sales recover in Asia
- Weakness in Mexico and Nicaragua led to 2.9% decrease in PRASM
Non-fuel costs (CASM) are down 0.4%
🌟 CASM = cost per available seat miles
While United’s fuel costs spiked a whopping 43% (~$2.4B), its non-fuel CASM decreased thanks to a ‘ramp up of cost savings’ (translation: cost cutting). It’s worth noting Delta reported a similar 40% increase in fuel costs, so it’s not just United dealing with rising costs.
Non-fuel costs are down | Image: United
Almost half of United’s seats (ASMs) are international
🌟 ASM = available seat miles
ASM breakdown by region
- Domestic = 56%
- Atlantic = 18%
- Pacific = 16%
- Latin America = 10%
United Explorer card: sell, sell, sell…
YoY new acquisitions for the Explorer Card are up 10%
Investors and Wall Street are happy, at least over the last few days
UAL 5-Day Stock Price | Image: Google
United’s cargo revenue is up 19%
United’s cargo performance | Image: United
Lastly… a new ‘favorite’ corporate jargon phrase
Ramp up of cost savings is a rather clever way of saying cutting costs.
H/T: View From the Wing
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