UAL Pool-ies
04-25-2014, 04:08 AM
#1182
Gets Weekends Off
Joined APC: Dec 2007
Position: FO
Posts: 424
Originally Posted by faipsrule
Seems like Q1 weather might have had something to do with it as we'll.
I can speak first-hand that the ramp fiasco in EWR before Christmas was definitely not weather. Yes there was snow, but it was poor upper and mid-level management that caused most of those problems. Wx can allow a great operation to excel or a poor one to flounder.
04-25-2014, 08:42 AM
#1183
Gets Weekends Off
Joined APC: Mar 2006
Position: SFO Guppy CA
Posts: 1,112
I think that this quarter's results come from wx, in part. But also UAL has a lot of expenditures in new aircraft which cost more on the front end. Over time, I believe that these expenditures will pay dividends. DAL has not bought new airplanes and Anderson has chosen to recycle airplanes. I'm not sure of that strategy 10 years down the line when all of those aircraft have a lot of time on their airframes and the costs associated with that (i.e. heavy checks, new engines, etc.). Just some food for thought...
04-25-2014, 10:00 AM
#1184
Gets Weekends Off
Joined APC: Nov 2013
Position: Gets weekends off
Posts: 1,168
Originally Posted by DashTrash
I think that this quarter's results come from wx, in part. But also UAL has a lot of expenditures in new aircraft which cost more on the front end. Over time, I believe that these expenditures will pay dividends. DAL has not bought new airplanes and Anderson has chosen to recycle airplanes. I'm not sure of that strategy 10 years down the line when all of those aircraft have a lot of time on their airframes and the costs associated with that (i.e. heavy checks, new engines, etc.). Just some food for thought...
04-26-2014, 05:32 AM
#1185
Gets Weekends Off
Joined APC: Dec 2008
Position: 320 Captain
Posts: 634
Originally Posted by pilot64golfer
Doesn't mean anything really.
The part that really matters that no one has mentioned from the report toward the bottom.
UAL generated $694 million of operating cash flow in the first quarter.
So United lost money on paper, but then there is almost $700M more in the bank than there was previously.
This is normal. It's because we are taking new airplanes, and then heavily depreciating them in the early years using something called MACRS, modified-accelerated cost recovery system. We are just doing so more aggressively than AMR, DAL, etc.
Remember that while on paper DAL is earning more, they are also paying more in taxes to the government. So it hurts their cash position.
Forget the profit or loss numbers. Watch the cashflow. It's a better indicator of financial performance in companies that have large asset classes that can be depreciated on different schedules.
The part that really matters that no one has mentioned from the report toward the bottom.
UAL generated $694 million of operating cash flow in the first quarter.
So United lost money on paper, but then there is almost $700M more in the bank than there was previously.
This is normal. It's because we are taking new airplanes, and then heavily depreciating them in the early years using something called MACRS, modified-accelerated cost recovery system. We are just doing so more aggressively than AMR, DAL, etc.
Remember that while on paper DAL is earning more, they are also paying more in taxes to the government. So it hurts their cash position.
Forget the profit or loss numbers. Watch the cashflow. It's a better indicator of financial performance in companies that have large asset classes that can be depreciated on different schedules.
A few things that need clarification. Like I pointed out in the other thread.
We are not adding $700 million to the bank. Our operation free cash flow was $694 million (good) however we spent more then that on capital expenditures (some good some bad), debt prepayment (usually a good thing) etc. so our cash balance (free cash flow) was actually negative.
And as far as taxes that Delta will pay, also not quite true as they are using the same accounting rules as UAL to offset payment of income taxes. Net operating losses from prior years. So no effect on cash balance.
From Delta's investor update April 2, 2014
Taxes
• In December 2013, Delta reversed its tax valuation allowance based on the past and expected future financial performance of the company. In the March quarter 2014, net income reported will reflect a 38% effective tax rate. There will be no impact to cash as Delta’s net operating loss carryforwards of more than $15 billion will offset cash taxes due on future earnings.
• In December 2013, Delta reversed its tax valuation allowance based on the past and expected future financial performance of the company. In the March quarter 2014, net income reported will reflect a 38% effective tax rate. There will be no impact to cash as Delta’s net operating loss carryforwards of more than $15 billion will offset cash taxes due on future earnings.
And as far as the debate of new airplanes versus "recycled" ones:
From the Delta 1Q conference call
Our fleet strategy is a good example of prudent capital deployment. In addition to 19 new 737-900s this year, which were cash flow positive day one, we’ll take delivery of 42 717s this year. These aircraft have at least 12 to 20 years of useful life and a cost substantially less than $10 million a copy without a dollar of upfront investments by Delta to bring them into the fleet. This approach to refleeting will drive margin expansion at a lower capital cost. This strategy has produced a 16.4% return on invested capital for Delta over the last 12 months.
We are lagging our peers in the industry, and have for a couple of years. While it is not the end of the world, and we are supposed to make good money this year overall, it will trail Delta and AMR by a lot.
And the excuse of we are are a couple of years behind delta loses its credibility when considering AMR' results who are several years behind us.
Hopefully things will get better, but this management team will need to do a change of course in the plan and execution, and right now I don't have confidence in them to do it well.
04-26-2014, 11:21 AM
#1187
Line Holder
Joined APC: Mar 2014
Position: VP of landing gear and flaps
Posts: 44
Originally Posted by Xjt2UAL
Hey fellow Poolies... Did everyone in the pool recieve a pool update on April 21? Myself and a few others who are in the pool didn't recieve one. Just curious. Thanks for any info
04-26-2014, 05:08 PM
#1188
Gets Weekends Off
Joined APC: Oct 2006
Posts: 1,316
Originally Posted by farklempt
That's when I got mine. Not much info relating to class dates but introducing the next manager of pilot hiring.
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