United Airlines Holdings, Inc. · NASDAQ:UAL
United Airlines — United Continental Holdings — Cowen and Company 8th Annual Global Transportation Conference (September 2015)
28 slides from United Airlines's conference presentation, Sep 9, 2015
Slide 1: Cowen and Company 8th Annual Global Transportation Conference
Cowen and Company 8th Annual Global Transportation Conference United Continental Holdings, Inc. Gerry Laderman – Senior Vice President Finance and Acting Chief Financial Officer Jim Compton – Vice Chairman and Chief Revenue Officer September 9, 2015 Exhibit 99.1
Slide 2: Improving long-term shareholder value
Grow CASM less than inflation Balance cash flow allocation Maintain capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 3: 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 PRASM to be down 5% - 7% for third-quarter 2015
Slide 4: 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 PRASM to be down 5% - 7% for third-quarter 2015
Slide 5: Making progress towards becoming the most reliable carrier in our hubs
YTD Consolidated Completion Factor at Major Hubs 1,2 Making progress towards becoming the most reliable carrier in our hubs Other major carriers 94.4% UAL 95.1% Chicago Houston/Dallas New York City 97.1 95.3 YTD consolidated completion factor Other major carriers 96.5% UAL 96.8% 97.2% Other major ca
Slide 6: Current network priorities
Keep total capacity in line with demand Re-allocate assets across network to address market level demand changes Consolidate frequencies, increasing gauge while decreasing departures Utilize flexible fleet plan to address regional pilot shortage Current network priorities
Slide 7: 2015 Capacity Guidance
2015 Capacity Guidance Jan 1.5% - 2.5% Apr Jul 1.0% - 1.5% 1.0% - 2.0% 2.0% - 3.0% Jan Apr 2.7% - 3.7% Jul 2.0% - 2.5% Strong U.S. dollar puts pressure on international markets, especially during off-peak months Decreased demand in oil-centric markets Lower international surcharges in Pacific Source
Slide 8: …and will continue to do so going forward…
Consolidated 0.5% - 1.5% International 0.0% - 1.0% Domestic 1.0% - 2.0% Source: SEC filings …and will continue to do so going forward… 4Q15 capacity Year-over-year change
Slide 9: …and will continue to do so going forward…
Consolidated 0.5% - 1.5% International 0.0% - 1.0% Domestic 1.0% - 2.0% Source: SEC filings …and will continue to do so going forward… 4Q15 capacity Year-over-year change 1Q16 capacity Year-over-year change Consolidated capacity 2.0% - 3.0% 2016 H/(L) vs. 2014 2.1% - 3.1% 2016 H/(L) vs. 2013 1.8% -
Slide 10: …and will continue to do so going forward…
Consolidated 0.5% - 1.5% International 0.0% - 1.0% Domestic 1.0% - 2.0% Source: SEC filings …and will continue to do so going forward… 4Q15 capacity Year-over-year change 1Q16 capacity Year-over-year change Consolidated capacity 2.0% - 3.0% 1% - 2% growth excluding leap year 2016 H/(L) vs. 2014 2.1%
Slide 11: …while consolidating frequencies and increasing gauge
…while consolidating frequencies and increasing gauge ~6.0% (~5.5%) Gauge Capacity Departures 1.0% - 1.5% FY15 frequency consolidation Year-over-year change ~5.0% (~3.0%) 2.0% - 3.0% 1Q16 frequency consolidation Year-over-year change Gauge Departures Capacity
Slide 12: Fleet upgauging results in a larger mainline fleet
~60% ~ 20 % 14% 56% Fleet upgauging results in a larger mainline fleet United fleet mix ~20% 70/76 seat Mainline 50 seat & below YE 2015E YE 2012 30% Seats per departure Upgauging benefits: More cost efficient Improved reliability Additional ancillary revenue opportunities
Slide 13: Improving long-term shareholder value
Grow CASM less than inflation Balance cash flow allocation Maintain capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 14: Demonstrating strong cost performance; on track to achieve $1B in non-fuel annual savings by 2016
Demonstrating strong cost performance; on track to achieve $1B in non-fuel annual savings by 2016 FY14 1.3% 0.0% - 0.5% FY15E Non-fuel CASM Year-over-year change Excluding special charges, fuel, third-party business and profit sharing expense. 2015E as of July 23, 2015 Investor Update. For a GAAP to
Slide 15: Improving long-term shareholder value
Grow CASM less than inflation Balance cash flow allocation Maintain capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 16: Balanced capital allocation
Invest in business Debt reduction Pension funding Shareholder compensation Balanced capital allocation Average capital expenditures of $2.7B - $2.9B through Achieve ~$15B gross debt target and progress toward investment grade credit metrics Achieve well-funded pension plan status Return $4B to share
Slide 17: Investing in the business while maintaining capital discipline
Technology Aircraft acquisition Aircraft modifications Airport enhancements Invest in business Debt reduction Pension funding Shareholder compensation Investing in the business while maintaining capital discipline Capital expenditures include net purchase deposits and exclude fully reimbursable capi
Slide 18: 767-300ER interior improvements
2 class configuration with BusinessFirst More overhead storage, larger seat-back video screens and slimline seats 767-300ER interior improvements
Slide 19: Flight attendant handheld devices
Process electronic payments for onboard purchases Replace printed safety and training manuals Real-time reporting and improved follow- up on aircraft cabin issues and repairs Flight attendant handheld devices
Slide 20: Airport enhancements
Lobby design Gate furniture Technology Airport enhancements
Slide 21: Continuing to pay down debt and de-risk the business
Debt reduction Through end of 2Q15, have pre-paid $920M of debt and eliminated all high interest prepayable debt Progressing toward investment grade credit metrics Continuing to pay down debt and de-risk the business Total debt outstanding ($B) Includes annualized aircraft rent capitalized at 7x 201
Slide 22: Funding pension in excess of minimum required
Pension funding Funding pension in excess of minimum required Source: SEC filings Debt reduction Shareholder compensation Invest in business Through end of 2Q15, have funded approximately $800M, substantially all of which is in excess of minimum required Expect minimal contributions for remainder of
Slide 23: Continuing to return cash to shareholders
Shareholder compensation Continuing to return cash to shareholders 2014 share repurchase authorization progress ($M) $230 $770 Through 2Q15 Remaining In July 2015, announced new $3B authorization to be completed by 2017 Expect to complete 2014 $1B authorization in 3Q15, almost 2 years ahead of sched
Slide 24: United's financial results continue to improve
Return on invested capital Pre-tax margin 12.9% 18.2% FY14 TME 2Q15 FY13 FY12 8.0% 10.0% FY12 2.6% 1.6% 5.1% 8.8% TME 2Q15 FY13 FY14 3.7% FY12 16.1% 5.8% FY13 TME 2Q15 FY14 10.5% Cash return on capital United’s financial results continue to improve 5.2x 5.5x 6.4x 5.2x FY11 FY14 FY13 FY12 Debt / EBIT
Slide 25: Improving long-term shareholder value
Grow CASM less than inflation Balance cash flow allocation Maintain capacity discipline Execute on revenue initiatives Improving long-term shareholder value
Slide 26: Slide 26
Slide 27: Appendix A: reconciliation of GAAP to Non-GAAP financial measures
Appendix A: reconciliation of GAAP to Non-GAAP financial (in millions, except CASM amounts) 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 Oper
Slide 28: Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued)
Appendix A: reconciliation of GAAP to Non-GAAP financial measures (continued) Return on invested capital (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 capi