Scaled down or shelved


Nov 19, 2002
We were told the LCC plans are shelved.

UAL scales down plan for budget air carrier
By Micheline Maynard, The New York Times
May 30, 2003

United Airlines is backing off its strategy to make a separate low-fare carrier the linchpin of its plan to emerge from bankruptcy, saying now that the operation will be only one aspect of its revamping proposal.

Executives repeatedly stressed the need for the low-cost carrier operation during the months immediately after United''s Chapter 11 bankruptcy filing in December. But since then, competitors like Delta Air Lines and American Airlines have stepped in with their own efforts to combat Southwest, JetBlue and other low-fare carriers.

United''s unions, while granting $2.56 billion of annual wage and benefit cuts, did not agree to a different pay scale, which would have maximized the efficiency of a low-fare operation.

In a telephone interview Thursday, Frederic Brace III, United''s chief financial officer, said: The low-cost carrier is not the centerpiece of our strategy. The centerpiece of our strategy is about serving business travelers and their needs profitably.

Brace said United was completing a business plan to present to its creditors'' committee June 11, as well as to its board and potential lenders.

He said executives were debating whether to try to emerge from bankruptcy in the fourth quarter or in the first quarter of 2004.

Brace said that United still planned to establish a low-cost operation with its own name, which will complement the main airline and United Express, United''s commuter airline.

Competing with low-cost carriers is still a very important thing to do and something we are going to do, Brace said.

But rather than roll out the operation everywhere it flies, the airline may now focus primarily on certain cities - including Denver; San Jose, Calif.; and New York - where it competes directly with Southwest, JetBlue and Frontier Airlines.

In some markets, Brace said, we will compete with a low-cost operation. In some markets, we''ll put a mainline product in competition with a low-cost carrier. In some markets, we''ll have United Express competing.

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