United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — United Continental Holdings — Q1 2018 Earnings Presentation
29 slides from United Airlines's earnings presentation, Apr 18, 2018
Slide 1: 1Q 2018 Earnings Call
1Q 2018 Earnings Call April 18, 2018 Exhibit 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 subj
Slide 3: Oscar Munoz Opening Remarks
Oscar Munoz Opening Remarks Chief Executive Officer
Slide 4: First-quarter 2018 earnings per share increased 63%; 19% as adjusted
First-quarter 2018 earnings per share increased 63%; 19% as adjusted Reported pre-tax earnings of $184M with a pre-tax margin of 2.0%; $179M and 2.0% as adjusted1 Exceptional operational performance despite weather challenges in the quarter 1 Excludes special charges and mark-to-market gain on equit
Slide 5: Improving customer service and experience is a top priority
Improving customer service and experience is a top priority Equipping employees with modern tools Completed rollout of 10,000 mobile devices for airport agents Started training our team on core4, United’s customer service hierarchical decision framework Designed to drive improved customer service an
Slide 6: Strong commitment to financial targets laid out January 23rd
Strong commitment to financial targets laid out January 23rd Primary focus areas: Strengthening and growing our domestic network Driving asset efficiency and productivity Remain committed to the long-term financial targets that we laid out on January 23rd 2018 target adjusted earnings per share rais
Slide 7: Scott Kirby Operations and Revenue Update
Scott Kirby President Operations and Revenue Update
Slide 8: The United team continues to deliver outstanding operational performance
The United team continues to deliver outstanding operational performance D:001 1 Consolidated system flights Source: masFlight 1Q18 D:001 A:141 1Q18 A:141
Slide 9: First-quarter 2018 revenue came in better than expected across all regions
First-quarter 2018 revenue came in better than expected across all regions Continued strength in business and leisure bookings Premium cabin outperformed across the international network International PRASM +4.1% Domestic PRASM +1.6%
Slide 10: 2018 consolidated capacity growth guidance
4.0% - 6.0% 4.5% - 5.5% 2018 consolidated capacity growth guidance YOY consolidated ASM growth
Slide 11: The first quarter of 2018 was a solid start to the year
Continued to run a great operation Began implementing our core4 framework with employees Started executing our growth plan and offering our customers better options for travel Expanded commercial initiatives that are expected to drive revenue improvements Improved efficiency and productivity The fir
Slide 12: Andrew Nocella Commercial Update
Andrew Nocella Executive Vice President & Chief Commercial Officer Commercial Update
Slide 13: Geographic region overview
Geographic region overview Domestic Latin Pacific Atlantic 1 Based on capacity from 2Q17-1Q18 % ASMs1 1Q18 YOY PRASM H/(L) Notes 56% 1.6% Healthy business and leisure demand 18% 8.8% Continued strength in front cabin, further bolstered by leisure traffic 16% (1.5%) Inflection in March – positive PRA
Slide 14: Commercial initiatives running in-line with expectations
Segmentation Loyalty Revenue Management Commercial initiatives running in-line with expectations Gemini running on all flights Early results are strong Basic Economy available for sale in two-thirds of our domestic non-stop markets Premium Plus will provide more space, comfort and amenities on selec
Slide 15: Polaris rollout running on schedule
Currently inducting a Polaris-configured aircraft every ten days Scheduled to open four Polaris lounges this year Continuing investment in the soft product Polaris rollout running on schedule
Slide 16: Andrew Levy Financial Update
Andrew Levy Financial Update Executive Vice President and Chief Financial Officer
Slide 17: First-quarter 2018 earnings per share, diluted of $0.52
First-quarter 2018 earnings per share, diluted of $0.52 $M 1Q18 1Q17 H/(L) Total revenue $9,032 $8,426 7.2% Fuel expense $1,965 $1,560 26.0% Non-fuel expense1 $6,883 $6,716 2.5% Pre-tax earnings $184 $150 22.7% Net income $147 $99 48.5% Earnings per share, diluted $0.52 $0.32 62.5% Weighted average
Slide 18: First-quarter 2018 adjusted earnings per share, diluted of $0.50
First-quarter 2018 adjusted earnings per share, diluted of $0.50 $M 1Q18 1Q17 H/(L) Total revenue $9,032 $8,426 7.2% Fuel expense $1,965 $1,560 26.0% Adjusted non-fuel expense1,2 $6,888 $6,665 3.3% Adjusted pre-tax earnings2 $179 $201 (10.9%) Adjusted net income2 $143 $132 8.3% Adjusted earnings per
Slide 19: Total CASM was up 4.3% in the first quarter of 2018
Total CASM was up 4.3% in the first quarter of 2018 Total CASM Year-over-year H/(L) ~4.5% 1 ~6.0% 1 1 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 these charges with reasonable certainty. 4.3%
Slide 20: Non-fuel CASM was up 0.6% in the first quarter of 2018
Non-fuel CASM was up 0.6% in the first quarter of 2018 Non-fuel CASM1 Year-over-year H/(L) Flat – 1.0% 2 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
Slide 21: Expect non-fuel CASM in second half of 2018 to step down
Expect non-fuel CASM in second half of 2018 to step down Lapping of incremental 50-seat flying that began in 3Q17 Planned capacity growth accelerates in second half, particularly in low cost, off-peak periods Expect continued improvements in productivity: aircraft, gates and people Cost initiatives
Slide 22: Capital allocation, capex and fleet update
Capital allocation, capex and fleet update 1 Excludes non-cash capital expenditures and fully reimbursable projects, the amount and timing of which are not determinable at this time. Accordingly, the Company is not providing capital expenditure guidance on a GAAP basis Share Repurchases Capex & Flee
Slide 23: Second-quarter 2018 guidance summary
Second-quarter 2018 guidance summary 2Q18 Capacity 4.0% - 5.0% PRASM 1.0% – 3.0% CASM ex1,2 flat – 1.0% Fuel price3 $2.18 - $2.23 Adjusted pre-tax margin4 9.0% - 11.0% 1 Excludes special charges, the nature and amount of which are not determinable at this time 2 Excludes fuel, profit sharing, and th
Slide 24: Full-year 2018 guidance summary
Full-year 2018 guidance summary FY18 Initial FY18 Update Capacity 4.0% - 6.0% 4.5% - 5.5% CASM ex1,2 (1.0%) - flat (1.0%) - flat Fuel price3 ~$2.11 $2.11 - $2.18 Adjusted Capex4 $3.6B - $3.8B $3.6B - $3.8B Adjusted EPS, diluted5 $6.50 - $8.50 $7.00 - $8.50 1 Excludes special charges, the nature and
Slide 25: Question & Answer Session
Question & Answer Session UNITED §.
Slide 26: United
UNITED
Slide 27: 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 pre-tax income (loss) excluding special charges and m
Slide 28: Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued)
Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued) UAL also presented non-fuel expense excluding special charges and MTM gains on equity investments. UAL believes that adjusting for special charges is useful to investors because special charges are charges not indicative o
Slide 29: Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued)
Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued) Cost per available seat mile (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
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