United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — United Continental Holdings — Q2 2018 Earnings Presentation
30 slides from United Airlines's earnings presentation, Jul 18, 2018
Slide 1: 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 2: Oscar Munoz Opening Remarks
Oscar Munoz Opening Remarks Chief Executive Officer
Slide 3: Strong year-over-year earnings per share
Strong year-over-year earnings per share Reported pre-tax earnings of $857M with a pre-tax margin of 8.0% Reported adjusted1 pre-tax earnings of $1.1B with an adjusted1 pre-tax margin of 10.4% Revenue initiatives delivered ahead of expectations Continued cost discipline 1 Excludes special charges an
Slide 4: Employee and customer satisfaction remains a top priority
Employee and customer satisfaction remains a top priority core4 is the beginning of a changing culture Flight attendant integration on track for October of this year Polaris roll-out on schedule A new Polaris equipped aircraft entering service every 10 days on average through 2020 Three world class
Slide 5: Recovering approximately 75% of higher fuel costs
Recovering approximately 75% of higher fuel costs Full-year 2018 adjusted EPS1 guidance raised to $7.25 - $8.75 from previous guidance of $7.00 - $8.50 Higher yield, commercial and operational initiatives expected to offset fuel headwind Plan to continue to grow at a pace that maximizes profitabilit
Slide 6: Scott Kirby Operations and Revenue Update
Scott Kirby President Operations and Revenue Update
Slide 7: Delivering top-tier operational performance continues to be our focus
Delivering top-tier operational performance continues to be our focus D:001 1 Consolidated system flights Source: masFlight 2Q16 2Q18 2Q17 2Q18 D:001 69.8% UA 70.0% WN 46.3% AA 65.2% DL Completion factor1 2Q16 98.3% 98.7% 2Q18 2Q17 98.6% 70.0% 69.7% 68.7%
Slide 8: Second-quarter 2018 revenue was strong and at the high-end of our outlook
Second-quarter 2018 revenue was strong and at the high-end of our outlook Continued strength in close-in bookings Outperformed in all regions with the exception of Latin International PRASM +4.3% Domestic PRASM +1.7%
Slide 9: Cargo revenue up 19% in the first half of 2018
Cargo revenue up 19% in the first half of 2018 607 +19% 1H18 1H17 511 Cargo Revenue $M Freight demand expected to continue to grow in the Pacific and in Latin America Almost a 40% increase in cargo revenue versus the first half of 2014
Slide 10: 2018 Guidance Update: capacity growth
4.5% - 5.0% 2018 Guidance Update 2018 April Guidance 4.5% - 5.5% 2018 January Guidance 4.0% - 6.0% 2018 consolidated capacity growth guidance YOY consolidated ASM growth
Slide 11: Fleet flexibility in the event of a downturn
Fleet flexibility in the event of a downturn 109 Lease expiations 2020E 2019E 94 Aircraft late in life-cycle with heavy maintenance due for major maintenance Flexibility levers in mainline fleet Estimated resulting capacity reduction (~12%) (~12%) Leased aircraft can be returned to lessor at time of
Slide 12: Positive momentum in the first half of 2018
Continued to lead the industry in on-time departures core4 contributed to improved customer and employee satisfaction Mid-continent growth strategy driving increased connectivity and improved profitability Product segmentation driving improved revenue: Polaris, Basic Economy, Economy Plus Improved p
Slide 13: Andrew Nocella Commercial Update
Andrew Nocella Commercial Update Executive Vice President and Chief Commercial Officer
Slide 14: Geographic region overview – Consolidated PRASM up 3.0% year-over-year
Geographic region overview – Consolidated PRASM up 3.0% year-over-year Domestic Latin Pacific Atlantic 1 Based on capacity from 3Q17-2Q18 % ASMs1 2Q18 YOY PRASM H/(L) Notes 56% 1.7% Pure domestic outperformed domestic leg of international 18% 7.9% ~2.0 point tailwind from foreign exchange 16% 3.4% L
Slide 15: Commercial initiatives running in-line with expectations
Segmentation Loyalty Revenue Management Commercial initiatives running in-line with expectations Gemini running on all flights and all cabins Results exceeded expectations in the first half of the year Rolled out Basic Economy in select Latin markets Launched a Basic Economy-like product across the
Slide 16: Opened three new world class Polaris lounges in the quarter
Opened three new world class Polaris lounges in the quarter EWR SFO IAH
Slide 17: Gerry Laderman Financial Update
Gerry Laderman Financial Update Senior Vice President Finance and acting Chief Financial Officer
Slide 18: Second-quarter 2018 earnings per share, diluted of $2.48
Second-quarter 2018 earnings per share, diluted of $2.48 $M 2Q18 2Q17 H/(L) Total revenue $10,777 $10,008 7.7% Fuel expense $2,390 $1,669 43.2% Non-fuel expense1 $7,530 $7,062 6.6% Pre-tax earnings $857 $1,277 (32.9%) Net income $684 $821 (16.7%) Earnings per share, diluted $2.48 $2.67 (7.1%) Weight
Slide 19: Second-quarter 2018 adjusted earnings per share, diluted of $3.23
Second-quarter 2018 adjusted earnings per share, diluted of $3.23 $M 2Q18 2Q17 H/(L) Total revenue $10,777 $10,008 7.7% Fuel expense $2,390 $1,669 43.2% Adjusted non-fuel expense1,2 $7,266 $7,018 3.5% Adjusted pre-tax earnings2 $1,121 $1,321 (15.1%) Adjusted net income2 $889 $849 4.7% Adjusted earni
Slide 20: Total CASM increased 7.1% in the second quarter of 2018
Total CASM increased 7.1% in the second quarter of 2018 Total CASM Year-over-year H/(L) FY18E2 ~5.1% 3Q18E1 ~6.3% 2Q18 1Q18 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 reasona
Slide 21: Non-fuel CASM decreased 0.4% in the second quarter of 2018
Non-fuel CASM decreased 0.4% in the second quarter of 2018 3Q18E2 (1.0%) – flat 2Q18 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 Company
Slide 22: Capital allocation and fleet update
Capital allocation 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 Capital Allocation Repurchased ~$1B w
Slide 23: Third-quarter 2018 guidance summary
Third-quarter 2018 guidance summary 3Q18 Capacity 4.5% - 5.5% PRASM 4.0% - 6.0% CASM ex1,2 (1.0%) - flat Fuel price3 $2.27 - $2.32 Adjusted pre-tax margin4 8.0% - 10.0% 1 Non-fuel CASM (operating expense per available seat mile) excludes fuel, profit sharing, third-party business expenses and specia
Slide 24: Full-year 2018 guidance summary
Full-year 2018 guidance summary FY18 January Guidance FY18 April Guidance FY18 Update Capacity 4.0% - 6.0% 4.5% - 5.5% 4.5% - 5.0% CASM ex1,2 (1.0%) - flat (1.0%) - flat (1.0%) - flat Fuel price3 ~$2.11 $2.11- $2.18 $2.21 - $2.26 Adjusted Capex4 $3.6B - $3.8B $3.6B - $3.8B $3.6B - $3.8B Adjusted EPS
Slide 25: Full-year 2018 guidance summary
Full-year 2018 guidance summary Capacity 4.5% - 5.0% CASM ex"? (1.0%) - flat Fuel price? $2.21 - $2.26 Adjusted Capex* $3.6B - $3.88 Adjusted EPS, diluted® $7.25 - $8.75
Slide 26: Question & Answer Session
Question & Answer Session UNITED RL
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 and losses on equity investments. UAL believes that adjusting for special charges is useful to investors because special charges are not indicativ
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
Slide 30: Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued)
pendix A: reconciliation of GAAP to Non-GAAP financial measures (continue
United Continental Holdings — Q2 2018 Earnings Presentation on 6ix