United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — United Continental Holdings — Q4 2018 Earnings Presentation
27 slides from United Airlines's earnings presentation, Jan 16, 2019
Slide 1: Forward-looking statements
Certain statements included in this presentation are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Such forward-looking statements are and will be subject to many risks and
Slide 2: Opening Remarks – Oscar Munoz
Opening Remarks Oscar Munoz Chief Executive Officer
Slide 3: Returned to margin expansion in fourth-quarter 2018
Returned to margin expansion (on an adjusted basis) in fourth-quarter 2018 Reported pre-tax earnings of $556M with a pre-tax margin of 5.3% Reported adjusted pre-tax earnings2 of $814M with an adjusted pre-tax margin2 of 7.8%, up nearly 100bps versus 4Q17 Most customers departed on-time in company h
Slide 4: Adjusted earnings per share grew by 33% in 2018
Adjusted earnings per share grew by 33% in 2018 Reported pre-tax earnings of $2.7B with a pre-tax margin of 6.4% Reported adjusted pre-tax earnings2 of $3.2B with an adjusted pre-tax margin2 of 7.7% 2018 continued the trend of best ever consolidated completion factor in United history3, for the four
Slide 5: Expect full-year 2019 adjusted EPS of $10.00 to $12.00
Expect full-year 2019 adjusted EPS to be $10.00 to $12.00 Recovered 98% of the year-over-year increase in fuel costs in 2018 Raised full-year 2018 guidance three times throughout 2018 despite $580 million headwind in fuel versus January 2018 guidance Performance reflected strong commercial initiativ
Slide 6: Operations and Revenue Update – Scott Kirby
Operations and Revenue Update Scott Kirby President
Slide 7: Record setting operations and improved customer service
Record setting operations and improved customer service FY18 Completion Factor1 2017 2016 0.3 pts 2018 FY18 D:001 WN 50.2% AA 65.3% UA 69.7% DL 69.8% 1 Consolidated system flights. Source: masFlight 9% 2018 2017 2016 FY18 Total Revenue (Billions) 98.3% 98.0% 97.9% $41.3 $37.8 $36.6
Slide 8: Historic relationship between revenue and fuel
Historic relationship between revenue and fuel 2019 adjusted EPS1 guidance of $10 - $12 Expect to meet or exceed this range at fuel from $40/bbl - $80/bbl Historically, revenue has lagged changes in fuel prices by about one quarter ($20) ($30) ($40) ($50) ($60) 10% 15% 5% 0% (5%) (10%) $40 $30 ($10)
Slide 9: Expect momentum to continue into 2019
Expect momentum to continue into 2019 Demand solid to start the year Uniquely United PRASM drivers Continue delivering top-tier operational performance Focused on meeting or exceeding our short and long-term financial targets
Slide 10: Commercial Update – Andrew Nocella
Commercial Update Andrew Nocella Executive Vice President and Chief Commercial Officer
Slide 11: Impact on Fourth-Quarter 2018 YOY PRASM
Impact on Fourth-Quarter 2018 YOY PRASM Uniquely United PRASM drivers, excluding growth 4Q18 Improved Operations, Customer Service, and Product ~1.0 pt Gemini ~1.0 pt Commercial Initiatives ~1.0 pt Fourth-quarter 2018 year-over-year consolidated PRASM up 5.0%
Slide 12: Geographic region overview – consolidated 4Q PRASM up 5.0%
Geographic region overview – consolidated 4Q PRASM up 5.0% year-over-year Domestic Latin Pacific Atlantic 1 Based on full-year 2018 capacity. We expect first-quarter 2019 year-over-year consolidated PRASM to be flat to up 3% % ASMs1 4Q18 YOY PRASM H/(L) Notes 56% 6.0% Strong close-in yields and busi
Slide 13: Commercial initiatives continue to deliver results
Polaris Network Commercial initiatives continue to deliver results Los Angeles Polaris Lounge opened last week On track to open Washington Dulles Polaris Lounge, our sixth domestic Polaris Lounge, late this year Denver rebank scheduled for February 2019 Possible itineraries have grown ~12% at our mi
Slide 14: Premium Plus is a key component of segmentation strategy
Premium Plus is a key component to United’s segmentation strategy United Premium Plus, our new premium economy product, now for sale with first flight scheduled for the end of March Early results show average United Premium Plus fare ~2x a standard Economy fare + ADDED CONVENIENCE + EXTRA SPACE
Slide 15: Financial Update – Gerry Laderman
Financial Update Gerry Laderman Executive Vice President and Chief Financial Officer
Slide 16: FY 2018 diluted earnings per share up 9%
FY 2018 diluted earnings per share up 9% year-over-year 1 Includes non-fuel operating expense and non-operating expense. $M 4Q18 4Q17 H/(L) FY18 FY17 H/(L) Total revenue $10,491 $9,451 11.0% $41,303 $37,784 9.3% Fuel expense $2,380 $1,875 26.9% $9,307 $6,913 34.6% Non-fuel expense1 $7,555 $6,956 8.6
Slide 17: FY 2018 adjusted earnings per share up 33%
FY 2018 adjusted earnings per share up 33% year-over-year Note: For a GAAP to non-GAAP reconciliation, see Appendix A. 1 Includes non-fuel operating expense and non-operating expense. 2 Excludes special charges, the mark-to-market impact of financial instruments and imputed interest on certain capit
Slide 18: Total CASM increased 7.0% in fourth quarter 2018
Total CASM increased 7.0% in the fourth quarter of 2018 and 6.2% for FY 2018 Total CASM YOY H/(L) FY19E1 1Q19E1 FY18 4Q18 1 Excludes special charges. While the company anticipates that it will record special charges throughout the year, at this time the Company is unable to provide an estimate of th
Slide 19: Non-fuel CASM decreased 0.7% in 4Q18
Non-fuel CASM decreased 0.7% in 4Q18, and 0.2% for FY 2018 4Q18 Flat or better FY18 1Q19E2 1 Non-fuel CASM (operating expense per available seat mile) excludes fuel, profit sharing, third-party business expenses and special charges. For a GAAP to non-GAAP reconciliation, see Appendix A. 2 While the
Slide 20: Capital allocation and fleet update
Capital allocation and fleet update Repurchased $240M worth of shares in the fourth-quarter 2018 FY 2018 capex of $4.2B exceeded plan largely due to opportunistic purchase of used aircraft and aircraft off-lease During the quarter, took deliveries of new aircraft: one Boeing 777-300ER, three Boeing
Slide 21: First-quarter and full-year 2019 guidance summary
First-quarter and full-year 2019 guidance summary 1Q19 FY19 Capacity 5.0% - 6.0% 4.0% - 6.0% PRASM Flat - 3.0% CASM ex1,2 Flat or better Flat or better Fuel price3 $2.00 - $2.05 Adjusted pre-tax margin4 2.5% - 4.5% Adjusted EPS4 $10.00 - $12.00 Adjusted Capex5 ($B) ~$4.7 1 Non-fuel CASM (operating e
Slide 22: First-quarter and full-year 2019 guidance summary
First-quarter and full-year 2019 guidance summary Capacity 5.0% - 6.0% 4.0% - 6.0% PRASM Flat - 3.0% CASM ex!2 Flat or better Flat or better Fuel price? $2.00 - $2.05 Adjusted pre-tax margin 2.5% - 4.5% Adjusted EPS* $10.00 - $12.00 Adjusted Capex’ ($8) ~$4.7 "Nenu CASM operating pense per avaiable
Slide 23: Question & Answer Session
Question & Answer Session
Slide 24: Appendix A: reconciliation of GAAP to Non-GAAP financial measures
Appendix A: reconciliation of GAAP to Non-GAAP financial measures UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and Non-GAAP financial measures, including adjusted pre-tax income (loss), adjusted pre-tax marg
Slide 25: Appendix A: reconciliation of GAAP to Non-GAAP (continued)
Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued) (in millions) Three Months Ended December 31, Full Year Ended December 31, Adjusted Non-Fuel Expense 2018 2017 2018 2017 Operating expenses (GAAP) $9,839 $8,675 $38,011 $34,113 Less: Aircraft fuel (2,380) (1,875) (9,307) (
Slide 26: Appendix A: reconciliation of GAAP to Non-GAAP (continued)
Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued) CASM is a common metric used in the airline industry to measure an airline’s cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel and profit sharing. UAL believes t
Slide 27: Cost per available seat mile (CASM) reconciliation
Coat pe aaa seat mile (CASM) (GAAP) Speciachage (a) rc) oor mt ‘Thuy bares enenses 00s 00s 3) 00s = a0) Fun epense er es) 2a 0 ‘CASH, excng special charges, tire-pay business expenses, and prot sharing Wen GAAP) _10zz 10290) 011 “Consolidate CASM excluding special charges, hé-party business expenses
United Continental Holdings — Q4 2018 Earnings Presentation on 6ix