Kathryn Mikells' Message to Employees — 4th Quarter Investor Update
Dear Fellow Employee,
Today we issued an update to investors on our financial outlook, commonly referred to as “investor guidance,” for the fourth quarter of 2009. This update is part of our normal practice as we approach the end of each quarter. To see the full update, you can go to www.united.com/ir.
Among the highlights in our fourth quarter financial outlook are improved revenue trends and excellent performance managing costs and strengthening our cash position. We expect consolidated passenger unit revenue to be down between 6.25% and 7.25% compared to the fourth quarter of 2008. While we still have a ways to go before a full recovery, our fourth quarter outlook is an improvement of about 8 percentage points from the third quarter and more than 10 percentage points from the second quarter. Delta has said they expect consolidated unit revenue to be down 5% to 6% for the fourth quarter and American has said they expect to be down 4.5% to 5.5%.
On the cost side, we are expecting to continue to lead the major network carriers in holding down year-over-year mainline non-fuel costs per available seat mile.
Our mainline non-fuel unit costs are expected to be up between 1.0% and 1.5% compared to the fourth quarter of 2008. In contrast, Delta has said that they expect their mainline non-fuel unit costs to be up 5% to 6%, and American has said they expect to be up 7.3%.
Your work this past year has enabled us to gain considerable ground versus peers by aggressively reducing costs as we trimmed capacity in response to the recessionary environment. Your focus and diligence in the New Year will be critical in maintaining this competitive advantage as we continue to run a good airline and deliver great service to our customers.
Lastly, I want to highlight our cash position. We expect to end the quarter with an unrestricted cash balance of approximately $3.0 billion, which is about $500 million higher than what it was at the end of the third quarter. This balance does not include roughly $250 million from financings completed in the fourth quarter that will fund in early 2010.
Thank you for your hard work and your contribution toward the good momentum we have generated across our scorecard from cost control to on-time performance to improved United Promoters scores.
In the quarter, we also welcomed Continental and Brussels Airlines to the Star Alliance, further enhancing Star’s position as the most comprehensive network of the three global alliances. Following last week's "open skies" agreement between the U.S. and Japan, we expect soon to apply, along with our Star Alliance partners All Nippon and Continental, for anti-trust immunization in the Pacific similar to the application that has already been approved by regulators for our joint venture arrangement over the Atlantic. We announced our decision to order 25 Boeing 787 Dreamliner aircraft and 25 Airbus 350 XWB aircraft with future purchase rights for 50 of each aircraft. Upon delivery starting in 2016, we will begin to retire our international B747 and B767 fleets. This aircraft order is another example of the steps we continue to take to strengthen our company for the longer term in a highly competitive global market. It will provide our customers and employees with a better travel experience in the cabin and new technology that reduces our impact on the environment, increases fuel efficiency and provides cost savings.
Along with you, I look forward to an improved economic environment in 2010 and continuing our good progress toward profitability and long-term success.
We plan to report our fourth quarter financial results the week of January 25 and will be sharing more details about our performance at that time.
Kathryn Mikells
EVP and CFO