Walks into room…

Doffs Covid and crypto hats
Donns public company financial reporting and SEC regs hat

”well akshully…”

Pilots… oh you’ve got a Doctorate? Cool cool but you haven’t heard my take on it

So what? It’s only in the last few years that airlines even started turning a Q1 profit. Historically it’s always been a loss.

Moving on…

I challenge anyone on here spreading fear to read the actual 8k on the United IR website. Literally the only change in the filed report is Q1 expenses are going from down 3-4% YoY to up 0-1% YoY, completely driven by pilot labor contracts. In fact they emphasize that demand / yield environment has only gotten stronger and revenue guidance has increased since their last update. So no, I don’t think the sky is falling on airlines (yet).

Relax kiddos. This is good news no matter how one slices and dices it.

The company is saying it expects to take a hit of $1-$1.5 per share for an "accrued" expense specifically tied to a new pilot contract. So, at a minimum they're looking at $300-$500 million in some cash payment in the near future. In GAAP accounting you take the charge for an expense when you first anticipate that charge, not when you cut the check. The company is saying they anticipate a deal sooner rather than later. If the company realistically expected negotiations to drag on in to next year they wouldn't be taking a hit to earnings now.

This is very good news.

EDIT: Except for the fact that my back of the envelope math says $3-500 million is a bit light if we were expecting retro going back 3-4 years.

This was expected. COVID revenge travel demand was only going to last so long, business travel and some international (China) demand has still yet to recover, and now the economy is leveling off. It will be interesting to see how the rest of the year goes.

I hope ya'll actually get retro as opposed to the bonus we got at DAL.

My apologies if I am misunderstanding your remark, but it sounds as if you think the company is forecasting a loss due to a reduction in demand. Nothing can be further from the truth. The company has said revenue for Q1 is up over 50% from this time last year and stands by the year end guidance of $10-12 per share of earnings. The loss is wholly a function of anticipated pilot labor costs as stated very clearly in the 8k filed with the SEC yesterday:

I agree that’s a low number unless the payments are coming in the dreaded “tranches” spread over several quarters.

I'd like to refine my earlier comment. The company said in the 8k filing they were advancing this from Q2 to Q1 so unless one believes the company is using SEC filings to play some mind game with UAL pilots the implication is that the company expects to have signed a deal before the end of Q2 otherwise there would be zero reason to move the charge forward.

There’s more to the update than that if you keep reading and compare to prior guidance.

The company also expects its fuel bill in the quarter to be about 4%-7% higher than previous estimate.
Meanwhile, a combination of lower-demand in January and February and higher capacity has weakened its pricing power.

Total revenue per available seat mile, a proxy for pricing power, is estimated to be up 22%-23% in the first quarter from a year ago, slower than a 25% growth expected.