Doing it our way now: the approach this company pioneered is becoming the market's way
The model's full reasoning — Q4 2022 call → NOWe need to determine if management describes that their way of doing things is being adopted by others in the market, and that they treat this as validation. Let's analyze the transcript. Key points from Scott Kirby's opening remarks: He talks about structural changes in the industry, cost convergence, and that United was ahead in preparing for recovery. He mentions that United invested early in technology, infrastructure, staffing buffers, etc. He says "we think we may be the only airline that’s actually figured this out" regarding the new math for pilots and ASMs. He also says "I think margins across the board are going to be higher in the airline industry. But because of the unique steps we took to prepare for exactly this kind of recovery, you’re also already seeing United’s relative performance is strong and I expect that lead to just expand." That suggests they are ahead, but not necessarily that others are adopting their methods. Later, Scott Kirby says: "I think what it’s going to lead to one way or another is less capacity. You just -- it’s not mathematically possible for all the airlines to achieve their aspirations." He talks about other airlines having operational issues, and says "watch completion factor" as a forward indicator. He says "we were right all this year with capacity coming in 7 points lower, and I feel even more confident that we’re right today." This is about predicting capacity, not about others adopting their approach. He also says: "I think the answer to that question is never. It isn’t a new environment, it’s a new industry. And that creates higher costs. It does, but it’s also creating higher revenues. And I think it’s going to lead to across the board higher margins, but particularly for United." This is about industry-wide changes, not specifically about others copying United. There is a mention of cost convergence: "I believe a world where ULCCs pay their pilots significantly less than us, yet, they can still hire and retain pilots, and they can somehow operate with previous staffing and utilization levels is just the null set. It’s not a realistic scenario. And with cost convergence, if I were a betting man, and actually I am, I’d bet that the revenue to GDP ratio is going back to the mid 5s." This is about cost convergence happening, but it's not explicitly about others adopting United's specific methods.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| AES | The AES Corporation | Q1 2024 | 2024-05-03 | C+ |
| GGR | Gogoro Inc. | Q1 2023 | 2023-05-11 | D |
| TGT | Target Corporation | Q4 2022 | 2023-02-28 | C |
| ORAN | Orange SA | Q2 2018 | 2018-07-26 | B |
| USFD | US Foods Holding Corp. | Q1 2018 | 2018-05-12 | C |
| SHOO | Steven Madden, Ltd. | Q1 2017 | 2017-04-21 | C |
AES · Q1 2024 → YESThe question is: Does management describe that the WAY THIS COMPANY DOES THINGS is NOW BEING ADOPTED, COPIED, OR MOVED TOWARD BY OTHERS IN ITS MARKET, so that the company's own way of doing things is ...
GGR · Q1 2023 → YESThe question is: Does management describe that the way this company does things is now being adopted, copied, or moved toward by others in its market?
TGT · Q4 2022 → YESThe question is: Does management describe that the way this company does things is now being adopted, copied, or moved toward by others in its market?