The Four Reasons United Airlines Believes It’s Going To Win

At the start of Wednesday’s United Airlines earnings call, CEO Scott Kirby outlined four reasons he believes United is positioned to win relative to competitor airlines:

  1. Cost-cutting. United says they’ll “lead on costs,” with expenses excluding fuel down 4% in 2023. They’ve become more staff-efficient during Covid-19 (despite government subsidies meant to prevent shedding employees) and they expect to retain these efficiencies through use of technology.

  2. Hub locations. Their hub locations have hurt them during the pandemic. New York and California have been ‘more closed’ than many other states, and they’re business travel reliant. THey’re also more international-heavy than American or Delta. However as those come back these disadvantages turn into advantages.

  3. Premium focus. They’re improving their product, bringing on new planes, and even retrofitting existing narrowbodies to offer seat back entertainment and they think customers will pay more for the product. I think the biggest change is actually installing better wifi, since United’s nearly-unusable wifi is why I’ve largely avoided booking them whenever possible the past several years.

  4. ESG (“Environmental, Social, and Governance”) United is focused on biofuels, carbon sequestration, and electric planes. Scott Kirby says their environmental focus is real “not greenwashing” and that “employees customers and regulators” care about this. Airlines are one of the most heavily regulated industries and getting out ahead rather than being dragged into more environmental investments doesn’t just make the Biden administration happy (which matters!) but is a bet that this is the direction the world is headed. Airlines worldwide are committing to long-term environmental goes, so better to frontload the investment.

United emphasizes how they will meet their cost targets, and that their model for full revenue recovery is conservative betting that they’re not fully back until 2026. However they’re ready to shift back to their normal strategy which means that most point-to-point flying from the pandemic goes away, though a few flights that have done well will remain despite strategic focus moving away from this type of flying.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Unlike American and Delta, United is actively improving and trying to get better. Delta is falling apart and America keeps racing to the bottom. If I wasn’t captive to Delta, I’d fly United.

  2. An airline seat has become a commodity. Most independent flyers choose a carrier based on price and schedule. Corporate flyers are often directed to utilize carriers under a contract. Fortress hub carriers dominate in their regions. The number of flyers who choose a carrier based on entertainment options or green awareness are insufficient to push United to the front. But good luck.

  3. Overall, i think the days of Untied are over and United is back. Kirby seems to have a vision, an opinion on where things are going, and is able to execute on it in a way that Parker cannot. Delta has also lost some important footing.

    Doesn’t mean I like United, but I can appreciate leadership with a vision and ability to execute.

  4. If the government would give me Billions upon Billions of dollars, I could be a green fanatic too. But I can only dream about being the recipient of such monumental grift.

  5. Actual reported financial data tell a different story than the narrative that UAL spouts.
    1. United reported the second largest loss of the big 4; only Delta was profitable excluding government aid.
    2. United reported lower unit costs ex-fuel than AA or DL but they also reported significantly significantly lower unit revenue than Delta and even lower than American. United is clearly carrying a lower percentage of business travel.
    3. While they hold onto hope that their hubs will generate higher revenue as markets reopen, there is very likely a permanent reduction in business travel and yields in United hubs, in part because of San Francisco and in part because of the growth of low cost carriers in United hubs.
    4. United paid by far the most per gallon for jet fuel in the most recent quarter.
    5. They are committed to returning their Pratt powered 777-200s to service which will hurt their fuel efficiency. Their massive domestic refleeting makes it impossible to get rid of their massive 777 fleet, including their 777-200s which are the least fuel efficient widebody in the US carrier fleet.

    It’s always easy to talk about all the positive things that you will do in the future to avoid talking about their current underperformance.

  6. Kirby’s playing us for fools…cut expenses and increase amenities?? Just flew back from Europe on Polaris. Crew were more like prison wardens…food was putrid, service completely nonexistent, Wifi no better than tom toms.

  7. Being better than American or Delta is a rather trivial goal. Come on United, aim higher than your own foot.

  8. United Airlines could win over it’s airline competitors even more if it incorporates the side hustle of hosting an affiliate program for travel bloggers to join.

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