United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — United Continental Holdings — JP Morgan Aviation, Transportation and Industrials Conference 2015
31 slides from United Airlines's conference presentation, Mar 3, 2015
Slide 1: JP Morgan Aviation, Transportation and Industrials Conference
JP Morgan Aviation, Transportation and Industrials Conference United Continental Holdings, Inc. John Rainey – Executive Vice President and Chief Financial Officer March 3, 2015 Exhibit 99.1
Slide 2: Revenue and cost initiatives driving improved earnings
Return on invested capital Pre-tax margin FY2015E 8.0% FY2012 FY2014 12.9% FY2013 10.0% FY2013 FY2012 1.6% 5.1% FY2015E FY2014 2.6% 10.5% FY2014 FY2012 FY2013 FY2015E 5.8% 3.7% Cash return on capital Revenue and cost initiatives driving improved earnings 1: Percentage of operating cash flow to inves
Slide 3: Improving long-term shareholder value
CASM growth less than inflation Cash flow allocation Capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 4: Efficient growth in 2015
Efficient growth in 2015 Capacity discipline Consolidated 1.5% - 2.5% 4% - 6% Latin Pacific 3% - 5% Atlantic 1% - 3% Domestic 0.5% - 1.5% Adding slimline economy seats Increasing utilization of aircraft Upgauging regional fleet capacity growth 1: Full year capacity year-over-year growth as of Januar
Slide 5: Improving long-term shareholder value
CASM growth less than inflation Cash flow allocation Capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 6: Several initiatives in place to improve revenue performance
Enhance revenue management Improve reliability Optimize the network Expand ancillary revenue Upgauge & simplify Express operation Several initiatives in place to improve revenue performance Expect to achieve PRASM down 1% to up 1% for first-quarter 2015
Slide 7: Enhancing the value of the network
Seasonal shaping Consolidating frequencies Re-banking Enhancing the value of the network Re-banking Denver (3Q14), Houston (3Q14); Chicago (2Q15) to improve passenger flow and optimize connection times Increasing gauge while reducing departures to increase revenue and improve operations Increasing s
Slide 8: Seasonal shaping
Seasonal shaping Seasonal shaping +39% July 2015 February 2015 Seasonal shaping System capacity (M ASMs) July 2012 +21% February 2012 Consolidating frequencies Re-banking
Slide 9: Consolidating frequencies
Consolidating frequencies Consolidating frequencies Gauge 6% Departures Capacity (4%) 1.5% - 2.5% 2015 frequency consolidation Year-over-year change Seasonal shaping Re-banking
Slide 10: Reducing dependence on smaller regional aircraft
56% Reducing dependence on smaller regional aircraft, while increasing average gauge YE 2012 44% United fleet mix
Slide 11: Reducing dependence on smaller regional aircraft
~60% 56% Reducing dependence on smaller regional aircraft, while increasing average gauge United fleet mix YE 2015E ~40% YE 2012 44%
Slide 12: Reducing dependence on smaller regional aircraft
~60% 56% Reducing dependence on smaller regional aircraft, while increasing average gauge YE 2015E ~40% YE 2012 44% United fleet mix Seats per departure
Slide 13: Reducing dependence on smaller regional aircraft
69% ~20% ~50% ~60% 56% Reducing dependence on smaller regional aircraft, while increasing average gauge YE 2015E ~30% YE 2012 31% Regional fleet mix United fleet mix 70 seats 50 seats or fewer 76 seats YE 2015E ~40% YE 2012 44% Seats per departure
Slide 14: Continuing to grow ancillary revenue
New products Powerful and nimble technology platforms Dynamic pricing capabilities Expand availability +7% CAGR 2015E $3.5+ Ancillary revenue ($B) 1: 2010 results are pro-forma Continuing to grow ancillary revenue, providing better choice and experience to our customers $3.2 $3.0 $2.8 $2.5 $2.4 $2.2
Slide 15: Improving long-term shareholder value
CASM growth less than inflation Cash flow allocation Capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 16: Demonstrating strong cost performance
Demonstrating strong cost performance 1.3% Non-fuel CASM Year-over-year change 1: Excluding special charges, fuel, third-party and profit sharing expense. For a GAAP to Non-GAAP reconciliation, see Appendix A
Slide 17: Demonstrating strong cost performance
Demonstrating strong cost performance 1.3% 0% - 1% 2015E Non-fuel CASM Year-over-year change 1: Excluding special charges, fuel, third-party and profit sharing expense. 2015E as of January 22, 2015 Investor Update. For a GAAP to Non-GAAP reconciliation, see Appendix A
Slide 18: Demonstrating strong cost performance; $1B non-fuel savings by 2017
Demonstrating strong cost performance; on track to achieve $1B in non-fuel annual savings by 2017 1.3% 0% - 1% 2015E Non-fuel CASM Year-over-year change 2015E Project Quality non-fuel savings ($M) $800 $380 1: Excluding special charges, fuel, third-party and profit sharing expense. 2015E as of Janua
Slide 19: Productivity improvements will drive $500M in annual savings by 2017
Productivity improvements will drive $500M in annual savings by 2017 +3% goal >3% 2015E 1: Percent change in YOY consolidated ASMs per FTE (full-time equivalent) Productivity (ASMs per FTE) On track for 15% - 20% improvement vs.
Slide 20: Current fuel environment
Current fuel environment Brent spot price ($/barrel) $99 (36%) Current spot 2014 average $63 1: As of February 27, 2015 fuel forward curve
Slide 21: Current fuel environment
Current fuel environment $1 drop in oil reduces annual fuel expense by ~$93M 1: As of February 27, 2015 fuel forward curve 2: $1/barrel decrease, excluding impact of hedge losses Brent spot price ($/barrel) $99 (36%) Current spot 2014 average $63
Slide 22: Current fuel environment
Current fuel environment 2Q - 4Q 1Q 2015 expected hedge loss ($M) Brent spot price ($/barrel) $63 $99 Current spot (36%) 2014 average $1 drop in oil reduces annual fuel expense by ~$93M 1: As of February 27, 2015 fuel forward curve 2: $1/barrel decrease, excluding impact of hedge losses $518 $183
Slide 23: Improving long-term shareholder value
CASM growth less than inflation Cash flow allocation Capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 24: Balanced capital allocation
Liquidity balance Capital investment Debt reduction Pension funding Shareholder compensation Balanced capital allocation Maintain unrestricted liquidity balance of $5B - $6B, including revolver Average capital expenditure of $2.7B - $2.9B over next to years Achieve ~$15B gross debt target and improv
Slide 25: Capital investment
Capital investment Investing in the business while maintaining capital discipline Liquidity balance Pension funding Shareholder compensation Debt reduction $2.7 - $2.9 $2.8 - $3.0 Average gross annual capital expenditures Next 3 – 4 years ($B) 1: Capital expenditures include net purchase deposits an
Slide 26: Debt reduction
Debt reduction Continuing to pay down debt and de-risk the business Liquidity balance Capital investment Pension funding Shareholder compensation Total debt outstanding ($B) 1: Includes annualized aircraft rent capitalized at 7x 2: 2010 data is pro-forma Source: SEC filings $20.1 $18.3 Target $22.3
Slide 27: Pension funding
Pension funding Funding pension in excess of minimum required Liquidity balance Capital investment Debt reduction Shareholder compensation Unfunded pension liability ($B) Plan to fund at least $400M, substantially all of which is in excess of minimum required 1: 2010 data is pro-forma Source: SEC fi
Slide 28: United is well positioned among peers
Pension funding Debt reduction $15.0 $7.7 $18.3 $11.4 $26.6 $4.2 United is well positioned among peers Liquidity balance Capital investment Shareholder compensation 2014 debt, pension, and post-retirement obligations ($B) AAL $34.3 DAL UAL $26.4 $22.5 Debt Pension & post-retirement 1: Year-end 2014
Slide 29: Improving long-term shareholder value
CASM growth less than inflation Cash flow allocation Capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 30: Consolidated CASM
Consolidated CASM Percentage Change Operating expense $36,528 $37,030 (1.4) Special charges NM Third-party business expenses (23.1) Aircraft fuel and related taxes 11,675 12,345 (5.4) Profit sharing 23.7 Operating expense excluding above items $23,641 $23,281 1.5 ASMs - consolidated 246,021 245,354
Slide 31: Appendix A: reconciliation of GAAP to Non-GAAP financial measures
Appendix A: reconciliation of GAAP to Non-GAAP financial measures ROIC is a non-GAAP financial measure that we believe provides useful supplemental information for management and investors by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to t