Observations:

• A smart investor would be listening to this call to trade Hawaiian. The Japanese tourist market and their new Haneda flying results in an enormous exposure for them.
• Might be a buying opportunity when the market over reacts.
• Overall, have to say Delta appears very well managed, although we still need to find a way to bring the fight to the domestic LCC's.
• Fewer Red Eyes in the bid package

 

And all of that reduction is DCI. That adjusts the picture that you put up yesterday quite a bit.

 

Where did it say that? Slide 9 just said 25% MEM reduction, although jumped in late so might have missed the verbal...

 

Are you deliberately trying to set off 88 Driver?

 

RFP will be in 3-4Q 2011.

I did not see that capacity reduction in MEM broken out. Maybe it is in the new schedule upload.


250-400 million dollar hit for Japan

15-20% reduction in those ops though May.

 

Really?

You may have information not stated in the call, but during the first Q&A Ed specifically said it was "Delta operated metal" when answering the question about the continuing domestic reductions.

MEM's definition as a "complimentary hub" to flow around Atlanta's capacity constraints tells me this is a reliever for Domestic passenger flows. As we pull down domestic capacity and park our smallest mainline jets, it does not make a lot of sense to upgauge the remaining flying while maintaining the current schedule. Not stating categorically that your post is not truthful, but it does not make sense based on the data points presented to our owners. For your statement to be true, we would experience a 15 - 30% capacity increase at MEM.

Further the LONG TERM trend to pull out of domestic market O&D flying in favor of serving domestic just to flow traffic into international operations does not bode well for any hubs that do not perform at least some sustainable level of international flying.

 

I like Hawaiian.

 

An investor might also think the street would punish United for adding fuel to the fire in the Atlantic, and failing to cut sufficiently:

United Continental shifts more flying overseas - Yahoo! Finance

Their conference call is at 11:05. I think I'll listen.

 

Look at this MarketWatch report:

United Continental boosts international capacity 03/22 07:29 AM

"...NEW YORK (MarketWatch) -- United Continental Holdings (UAL:$23.9700,$0.6000,2.57%) is planning to shrink its domestic seat capacity by 2.1% in the first quarter, versus a year ago, while lifting international capacity by 5.7%. For the year, domestic capacity is forecast to decline by 2% to 3%, with international up 3% to 4%. Unit revenue for the first quarter is expected to rise 10% to 11%, with cargo and other revenue adding between $1.01 billion and $1.02 billion. Unit costs, excluding fuel and some other expenses, were estimated to rise 2.75% to 3.25% for the quarter. The Chicago-based carrier expects to end the first quarter with $8.9 billion in unrestricted cash, cash equivalents and short-term investment. Mainline domestic bookings for the next six weeks are up 1.4 points, while international bookings are down 4.1 points...."

See, all you have to do is to contrast revenue increases with ex-fuel costs. If you don't account for fuel, then it makes sense to add international capacity.

I think it will be clear from our conference call that revenue increases are not quite enough to match increased costs.

 

250 million in free cash for Q1

RFP is a "timing" issue not a cash issue! AKA, bad time to announce new jets because of where the investors want to see capacity discipline.

Still showing strong forward bookings for Atlantic. (+7-8% YOY) but expect that to fall of this fall, and that is where the capacity reduction is aimed.

Reduced CAPex to 325 million for Q1, a reduction of 15 million.
Still looking at 5.4billion in unrestricted liquidity.

Hedging looks good.

Overall a conservative position.

No fear should be generated by this news.