United Airlines 2008 Annual Report Download - page 46

Results of Operations
Operating Revenues.
2008 compared to 2007
The table below illustrates the year-over-year percentage change in UAL and United operating
revenues.
(In millions) 2008 2007
$
Change
%
Change
Year Ended
December 31,
Passenger—United Airlines ...................... $15,337 $15,254 $ 83 0.5
Passenger—Regional Affiliates .................... 3,098 3,063 35 1.1
Cargo ....................................... 854 770 84 10.9
Special operating items .......................... — 45 (45) (100.0)
Other operating revenues ........................ 905 1,011 (106) (10.5)
UAL total .................................. $20,194 $20,143 $ 51 0.3
United total ................................. $20,237 $20,131 $ 106 0.5
The 2007 special item of $45 million relates to an adjustment of the estimated obligation associated
with certain bankruptcy administrative claims, of which $37 million and $8 million relates to the mainline
and United Express reporting units, respectively. The table below presents selected UAL and United
passenger revenues and operating data from our mainline segment, broken out by geographic region
with an associated allocation of the special item, and from our United Express segment, expressed as
year-over-year changes.
2008 Domestic Pacific Atlantic Latin Mainline
United
Express Consolidated
Increase (decrease) from 2007:
Passenger revenues (in millions) . . . $ (156) $ (91) $ 263 $ 30 $ 46 $ 27 $ 73
Passenger revenues . ........... (1.7)% (2.8)% 11.1% 6.0% 0.3% 0.9% 0.4%
Availableseatmiles(“ASMs”)..... (7.8)% (4.8)% 11.0% (2.8)% (4.2)% (0.8)% (3.9)%
Revenue passenger miles
(“RPMs”)................. (8.5)% (9.4)% 7.9% (5.5)% (6.3)% (3.9)% (6.0)%
Passenger revenues per ASM
(“PRASM”) . . . . . . . . . . . . . . . . 6.7% 2.1% 0.1% 9.0% 4.7% 1.8% 4.5%
Yield(a).................... 7.4% 7.2% 2.2% 12.7% 6.9% 5.0% 6.8%
Passenger load factor (points) ..... (0.6)pts. (3.9)pts. (2.3)pts. (2.2)pts. (1.7)pts. (2.4)pts. (1.8)pts.
a) Yield is a measure of average price paid per passenger mile, which is calculated by dividing passenger revenues by RPMs.
Yields for geographic regions exclude charter revenue and RPMs.
In 2008, revenues for both mainline and United Express benefited from yield increases of 6.9% and
5.0%, respectively, as compared to 2007. The yield increases are due to industry capacity reductions and
fare increases, including fuel surcharges plus incremental revenues derived from merchandising and fees.
However, the benefit of higher yields was partially offset by 6.3% and 3.9% decreases in traffic for the
mainline and United Express segments, respectively. Consolidated passenger revenues in 2008 included
an unfavorable variance compared to 2007 that was partly due to the change in the Mileage Plus
expiration policy for inactive accounts from 36 months to 18 months that provided a consolidated
estimated annual benefit of $246 million in 2007. In addition, the weak economic environment negatively
impacted demand and passenger revenues, particularly in the fourth quarter of 2008.
International PRASM was up 2.4% year-over-year with a related capacity increase of 0.9%. While
Latin American PRASM growth was strong at 9.0% year-over-year, it is not a significant part of United’s
international network. Atlantic performance was driven by lower than average revenue growth in our
London and Germany markets, largely due to industry capacity growth of approximately 13% in the
U.S. to London Heathrow route and United’s 15% growth in Germany. These markets account for
approximately 75% of our Atlantic capacity. The Pacific region was impacted by 7% industry capacity
growth between the U.S. and China / Hong Kong, which account for approximately 45% of United’s
Pacific capacity.
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