MasterOfPuppets

You should probably read this, its a transcript from yesterdays call. Take special notice of what Kirby says about the your beloved 50 seaters.

Hunter Keay
It’s Hunter Keay at Wolfe Research. Appreciate the multi-year CASM guidance and you said it includes all labor deals going forward, you're kind of up against the sort of max that you're allowed on your scope right now, Scott and I'm wondering how you can be so confident on that cost guide, when you're probably going to need some give back and scope from your pilots to achieve some of this regional feeds you’re trying to do. So how do you put a dollar amount on the amount that you're going to have to pay for likely scope relaxation? Unless you reject the premise of the question that you don't need scope relaxation?
Scott Kirby
Look, I start with -- I completely understand why our employees and our pilots in particular are worried about scope, because they have seen us take, as I said in the presentation, take airplanes out of a place like Rochester to Chicago and put it in Newark Atlanta. And they know that was stupid and they were right. We should not have done that. But we're now doing it the right way. We're not just asking them to believe us, we’re making commitments, where actions speak louder than words.
We're up-gauging back in markets where we should be up-gauging and we're putting the regional jets in the right market. But our plan is predicated on having -- it's a critical element, having that high yield flow come through our hubs and we shouldn’t have been finding regional jets in a market like Newark, Atlanta but we're going to have to fly regional jets in places like Rochester, Minnesota or Elmira, New York or Columbia, Missouri. We're going to have to fly regional jets because that's the size of the market and we can't grow the mainline if we don't have that high yield flow coming through hubs.

And so there is a win-win. The reality is, we will grow the main – the reason pilots want scope and don't want us growing is because they're worried about jobs. But we're going to create more pilot jobs by having the right kind of aircraft flying, having the right kind of regional jets flying, which then gets to the next point. In the past, we could fly 50 seaters and we've got a temporary surge in 50 seaters in 2018 because we don't have a choice today. But in the long run, we can't be flying in a market like Rochester, Minnesota with a 50-seater if our two competitors are flying two class regional jets.

We will have an uncompetitive product, just like we had an uncompetitive product in Newark to Atlanta for the local market, we will have an uncompetitive product for Rochester to the world and we won’t stay in that market. And that's bad for the mainline, because if we can't feed that high yield revenue into the hub, then we can't make it work. And I’d believe our pilots understand that.

Because they've been burned in the past, they're going to want some kind of commitment from us, but I think the deal winds up being, we don't need more airplanes, but we can wind up turning 50-seaters into larger regional jets, but we make some kind of commitment to them, whether it's a growth commitment or jobs or some kind of commitment that says, we're not just asking you to trust us that we're going to do the right thing, but it's not about buying scope relief. It's about addressing the issue and the issue is about jobs for them. And they've seen their jobs get outsourced and we do that.

That is a win-win-win for all of us, because it’s something we need to do anyway as we talked about extensively in the network deck and that's a win for our pilots and that's really what they want. The protection, they're not trying to protect themselves against Rochester, Minnesota. They're trying to protect themselves against us doing that Dallas to Chicago and we shouldn't be doing it in a market like Dallas to Chicago. And so, we are talking to them and I think we're going to wind up with a win-win-win that fits within our CASM guidance. So, we wouldn’t have given that CASM guidance today.

oldmako

Your last sentence is probably correct. But the rest of your post consists mainly of the malodorous residue of male bovine digestion.

As much as I hate a middle seat, I'll take one over a 50 seat RJ seat, any day of the week. From a pax standpoint, outside of a first-class or a business class seat on a big plane, the EMB is probably the best plane in the sky. But, they're a drop in the proverbial bucket and they're heavily scoped. The fact is that the overwhelming percentage of pax despise narrow fuselage RJ's and their tiny seats. Pax are smarter than airline managers.

Keep posting. Love the entertainment value. And all those exclamation points, they really add credibility to your argument. "Duh!!"

sailingfun

Delta is able to deploy a better regional product because they choose to purchase 100 seaters at the mainline. Might be something to point out to your management team when they demand more 76 seaters.

MasterOfPuppets

Oh we’re aware and management is too they are using the 100 seater as a bargaining chip. UA will have a 100 seater on property by 2020, they have too in order to compete.

Andy

MasterOfPuppets was spot on.

Tell me more about regional feed. RJ CASM is the highest in aviation; A319s can be operated for close to the same cost as a 50 seater and less than the cost of two 50 seaters that it could replace. Half the frequency but passengers would much prefer to ride on a mainline aircraft than ANY RJ.
The majors will survive just fine when the day comes (and it will) when all RJ feed no longer exists.

I've commuted a LOT. Riding on an RJ is pure misery, worse than a middle seat even if wedged between the 350lb POS and the new mother with the screaming poop factory.

As far as shorting UAL stock, go for it. For me, it's in no man's land. I wouldn't touch it right now on the long or short side. If it gets to the low 60s, I'd buy. In today's markets, I wouldn't go short anything. Even if there were a stock named, 'career RJ pilot'.

CousinEddie

This article probably sums up the way Kirby sees things:

https://www.bloomberg.com/news/artic...ing-your-money

MasterOfPuppets

It sounds like Kirby wrote that article......

Tranquility

Outsider here, is there a webcast of the earnings release?

Skyw

Like Kirby said, the 50 seaters will be replaced by larger RJs and you will never see the larger RJs at mainline. Mesa just announced they are opening up Atlanta as a base for United. So larger RJs make more economic sense in bigger markets if mainline can't fill seats.

Half wing

So are you saying you want large rj’s at the regionals? You do realize that would mean you may never make it to “mainline”? Also, you think rj’s flying into places like ATL is a good idea? Even Kirby is well known for saying how dumb that is, specifically out of ATL. So no large RJ’s at mainline you say? We will see 100 seaters at mainline. No other way to get more >50 seat jets at the regionals. Man, everything you say reeks of someone who has been flying RJ’s for less than a year. Don’t preach to us like we don’t know what is good for UA. Get a clue man.