Scheduled system seat capacity for the Sep-Dec four-month period shows seats +5.2% y/y, down 27bp w/w mainly on LUV MAX cuts but also on some non-MAX UAL trims. Domestic growth was down 31bp w/w to +5.5% y/y, as LUV and UAL cuts were slightly offset by adds from DAL and Frontier. Pacific capacity was flat w/w at +2.2% y/y, transatlantic was down 32bp w/w to +5.5% y/y, and Latin was up 14bp w/w to +1.0% y/y. Int’l capacity growth was flat w/w at +2.3% y/y. Domestic competitive capacity was flat w/w at +6.1% y/y.
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In the six years following the UA-CO merger, UAL lost 2.7pp of domestic seat share. In the four years after the AA-US merger AAL has lost 2.6pp of domestic seat share. Three years ago, UAL was losing share, running a poor operation, and suffering from high unit cost growth and low employee morale. AAL is now in a similar situation. So, in that sense, the AAL fix is easy: do what UAL did.
UAL hosted its earnings call today (07/17/19). It was good. Some people we spoke to after the print last night were asking why UAL didn’t raise 2019 EPS guidance to $11.00-$12.00 instead of the $10.50-$12.00 range they announced (prior range was $10-12), wondering if UAL was implying some nervousness about 4Q. UAL disabused that idea fairly emphatically, saying an outright beat of the high end is likely barring uncontrollable headwinds. Of course, uncontrollable challenges happen all too often in airlines, but well-run airlines overcome them, and investors show more patience as they happen. Look at LUV right now. Higher margins fortify that defense, and UAL continues to aspire towards that status. It is a long journey.
UAL reported GAAP 2Q19 EPS of $4.02 but adjusted EPS of $4.21, above consensus of $4.12. Most forward guidance was in line or slightly above our estimates including 3Q PRASM (+0.5% to +2.5% y/y, 50bp better than our 0-2% y/y), 3Q PT margin (+10-12%, in line with our estimate), and FY19 EPS guidance (raised from $10-12/share to $10.50-$12, though we were expecting a new range of $11-12). The PR has been out for ~60 mins and only one person called us, so that probably means it’s fine.
Scheduled system seat capacity for the Sep-Dec four-month period shows seats +5.4% y/y, down 27bp w/w largely on AAL’s recent MAX cuts. Domestic seat growth was down 28bp w/w to +5.8% y/y, as AAL and UAL cuts were slightly offset by adds from JBLU and ALGT. Pacific capacity was down 25bp w/w to +2.2% y/y, transatlantic was flat w/w at +5.8% y/y, and Latin was down 37bp w/w to +0.9% y/y. Int’l capacity growth was down 27bp w/w to +2.3% y/y. Domestic competitive capacity was down 38bp w/w to +6.1% y/y.
This is Between Two Phones, an occasional piece we do where we interview someone in or around the airline industry who carries influence but may also be under the radar of airline investors. This time it’s Mike Leskinen, VP of Corporate Development and Investor Relations at UAL.
Scheduled system seat capacity for the Sep-Dec four-month period shows seats +5.7% y/y, flat w/w. Domestic seat growth was flat w/w and is still +6.1% y/y, as adds by SAVE and DAL were slightly offset by Frontier cuts. Pacific capacity was down 20bp w/w to +2.4% y/y on DAL cuts, transatlantic was flat w/w at +5.8% y/y, and Latin was flat w/w at +1.3% y/y. Int’l capacity growth was up flat w/w at +2.6% y/y. Domestic competitive capacity was flat w/w at +6.5% y/y.
We survey investors quarterly to quantify sentiment and views on key topics. This quarter we had 91 replies. Thanks for replying, if you did! For context, all survey answers were submitted before DAL’s investor update on Tuesday morning (7/2/19). This survey had some atypically polarized and useful results.
Scheduled system seat capacity for the Sep-Dec four-month period shows seats +5.7% y/y, down 30bp w/w mainly on MAX cuts. Domestic seat growth was down 30bp w/w to +6.1% y/y, as cuts by LUV, AAL, ALK, and UAL were slightly offset by Frontier and JBLU adds. Pacific capacity was up 70bp w/w to +2.6% y/y, transatlantic was flat w/w at +5.8% y/y, and Latin was up 40bp w/w to +1.3% y/y. Int’l capacity growth was up 30bp w/w to +2.6% y/y. Domestic competitive capacity came down 30bp on w/w but is still growing +6.5% y/y.
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