Thread: UCH 2Q Profit
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Old 07-26-2012, 07:38 PM
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ualratt
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Default Earnings Call Analysis/Media Questions Part 2

Again my apology for the lengthy content...


(from part 1) ...It's entirely separate.


David E. Fintzen - Barclays Capital, Research Division

And when think competitive, I mean, just given your network and you're less connection oriented, your hubs are in bigger cities, you've -- is it -- what happened at American, that's a little more pressing on the competitive side? Or Delta? Or both?

Jeffery A. Smisek

Well, I view for the competiti ve landscape across all of our competitors, and when it comes to regional aircraft, that of course is more domestic issue than our global international competitors. But we have to look to Delta, we have to look to American, we have to look to everyone.

David E. Fintzen - Barclays Capital, Research Division

And just maybe if I sneak one in on the -- just on the Atlantic book load factor, and a month ago or so was down 2, now it's flat. You have the London commentary, Jim, which I appreciate, but you -- should we read anything into that? Or is that in sort of some of the fare activity in the sales that Jim, you were talking about earlier?

James E. Compton

Being flat now versus --

David E. Fintzen - Barclays Capital, Research Division

Being flat versus 2, I mean, is that the margin? Should we read that as Atlantic out a little bit better x London? Or...?

James E. Compton

Flight or the adjusted capacity, even as we kind of moved to the summer slightly and so forth. But I think, I would say that the demand's relatively stable and it's kind of, us trying to better match the capacity with demand. There can be -- there's a little bit of fare pressure in some markets, it's a little bit of revenue management looking for opportunity to take some marginal traffic that otherwise, that I think's closed some of that load factor.

Operator

Thank you, ladies and gentlemen. This concludes the analyst and investor portion of our call today. We will now take calls from the media. [Operator Instructions] And from Wall Street journal, we have Susan Carey online.

Susan Carey

I have 2 questions. First of all, I wonder if you could run me through this issue of the Unite d spares. You pulled it down to what, and you're bringing it back up to what?

Jeffery A. Smisek

I'm sorry, Susan. You're very faint, and it's very hard to hear. Could you speak a little more loudly please?

Susan Carey

Okay, I'm wondering if you could give me a little bit more flavor on the issue of the United spares being taken down and being pulled back up. Like, how many or what was that all about?

Jeffery A. Smisek

I'm sorry?

Susan Carey

Spares.

Jeffery A. Smisek

Oh, spares, I'm sorry, actually, I'll ask Pete McDonald, who's our Chief Operations Officer, to take you through the details.

Peter D. McDonald

Susan, so United, on the United side of the fleet, we traditional ly had run with 15 spare aircraft across the various fleets in total. And as --

Susan Carey

Mainline?

Peter D. McDonald

Yes, mainline. And that's excluding regional. And as part of the tech ops harmonization, as you know, the Continental side had very, very good completion factor, and one of the best practices that Continental had used was this preventative process of the -- preventative service lines where you produce time in the schedule where aircraft will go in there on a preplanned basis and have work done, and that was a big contributor to the high completion factor. United adapted that, and we had to hire mechanics and inventory and so forth to support those lines. And to pay for that, we reduced the spare aircraft on the United side, expecting that we would see similar completion with that process. Unfortunately, the health of the United fleet wasn't ready yet for that kind of reduction in the spare complement. So we have -- we are and have done some of the replacement of those spares. We expect that to continue for some period of time. We don't want that to be the long-term strategy for our fleet, and expect over time to go back down to sort of the 9 level that we had anticipated for this year.

Susan Carey

And I'd like to ask one other question. This is sort out of left-field, if you excuse me. Now that Japan Airlines is out of bankruptcy and is in the midst of its turnaround, we're wondering if what its significance is to U.S. competitors and whether it's had any impact on United and its partnership or if the AA joint venture with JAL has had any impact on your operations to Japan?

James E. Compton

This is Jim. Yes, the -- obviously, it's a competitive business, and every competitor we watch and so forth. I will tell you, a s we build the joint venture in the Pacific with ANA, a great partner, and our ability to kind of bring more fair product, consistent fair product, better connections in Tokyo using ANA, we actually feel really good with our position to be able to compete in that market with any carrier.

Operator

And our final question, from the Associated Press, we have Josh Freed online.

Josh Freed

Could you say a little more about the Slimline seats that you're putting in? Which aircraft, and what the timing is for that?

John Rainey

Sure. So we're going to -- this is John. We're going to begin installing them on our Airbus fleet. We're actually making a number of investments in the 319s and the 320s, including bigger overhead bins, better lighting, the Slimline seats and ultimately Wi-Fi and NC power. All of which will make that a much better aircraft for our passengers and a better customer convenience. That's where we are starting. I think we'll evaluate that as we look at our other fleets, I don't know that we've committed to anything at this point. But importantly, what that allows us to do, one is it's a much lighter seat, and so we get an appreciable amount of fuel savings and then of course, you're able to put more seats on the plane, which is better from a revenue perspective. But as we begin to get experience with that seat, and install that on the Airbus, we'll roll that out and will give you guys a lot more detail about that.

Josh Freed

How many more seats on the plane?

John Rainey

About 6? 6.

Josh Freed

All right. And is that related at all to the recall issue from a couple of years ago? Or is that a totally separate thing?

John Rainey

Irene E. Foxhall

Okay, as we're out of time, we'll conclude. Thanks to all you on the call for joining us today. Please call Media Relations if you have any further questions, and we look forward to talking to you next quarter. Goodbye.

Operator

Thank you, ladies and gentlemen, this concludes today's conference. You may now disconnect.
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