From AP: feb 22
United Airlines aims to cut costs, increase revenue, consider acquisitions
Associated Press
CHICAGO - United Airlines, fresh out of bankruptcy, is focused on improving core operations and will consider acquisitions that would boost earnings, chief executive Glenn Tilton said Wednesday.
United, a unit of UAL Corp. and the second-largest U.S. airline by passenger traffic behind American Airlines, emerged from bankruptcy earlier this month.
Tilton, United's chairman and president, told analysts at an airline investment conference sponsored by JP Morgan that he expects to see consolidation in the airline sector.
"One thing we won't do is sit by and watch," he said during a Webcast presentation.
Tilton said United would look at acquisitions that would increase earnings per share.
"Consolidation is going to take place, and should take place, in spite of the fact that it's hard," he said.
This year, United expects to cut costs by another $300 million.
Chief Financial Officer Jake Brace said the airline cut labor costs by 25 percent during three years in bankruptcy but still needs to bring down operations expenses to catch up with competitors. The airline can do that mainly by "resource optimization," such as faster flight turnaround times, Brace said.
United plans to increase revenue from a number of sources. The airline's Economy Plus program, offering more seat room to passengers, has been a success and will generate $50 million a year from selling seats to non-elite customers, Brace said.
United now can bring in $1.5 billion a year in revenue from non-passenger business. That includes $800 million per year from its mileage program and $700 million per year from cargo services. Outsourcing maintenance will generate $250 million this year and is growing quickly.
Out of bankruptcy, United now can realize long-term potential with its strong international routes, Tilton said. In particular, it has a head start over other domestic airlines with routes and code-sharing partners in Japan and China.
But Brace said competition over trans-Atlantic routes is a concern.
Another focus at the conference is how soon cash-strapped U.S. airlines will be back in the market to order new airplanes. United won't need new aircraft any time soon, Brace said, since the average age of its fleet is 11 years old. Once United begins to beat forecasts laid out in its five-year business plan, the airline will look at purchasing new aircraft, Brace said.
Shares of Elk Grove Village, Ill.-based UAL Corp. rose 10 cents to $35.53 in midday trading Wednesday on the Nasdaq Stock Market.
United Airlines aims to cut costs, increase revenue, consider acquisitions
Associated Press
CHICAGO - United Airlines, fresh out of bankruptcy, is focused on improving core operations and will consider acquisitions that would boost earnings, chief executive Glenn Tilton said Wednesday.
United, a unit of UAL Corp. and the second-largest U.S. airline by passenger traffic behind American Airlines, emerged from bankruptcy earlier this month.
Tilton, United's chairman and president, told analysts at an airline investment conference sponsored by JP Morgan that he expects to see consolidation in the airline sector.
"One thing we won't do is sit by and watch," he said during a Webcast presentation.
Tilton said United would look at acquisitions that would increase earnings per share.
"Consolidation is going to take place, and should take place, in spite of the fact that it's hard," he said.
This year, United expects to cut costs by another $300 million.
Chief Financial Officer Jake Brace said the airline cut labor costs by 25 percent during three years in bankruptcy but still needs to bring down operations expenses to catch up with competitors. The airline can do that mainly by "resource optimization," such as faster flight turnaround times, Brace said.
United plans to increase revenue from a number of sources. The airline's Economy Plus program, offering more seat room to passengers, has been a success and will generate $50 million a year from selling seats to non-elite customers, Brace said.
United now can bring in $1.5 billion a year in revenue from non-passenger business. That includes $800 million per year from its mileage program and $700 million per year from cargo services. Outsourcing maintenance will generate $250 million this year and is growing quickly.
Out of bankruptcy, United now can realize long-term potential with its strong international routes, Tilton said. In particular, it has a head start over other domestic airlines with routes and code-sharing partners in Japan and China.
But Brace said competition over trans-Atlantic routes is a concern.
Another focus at the conference is how soon cash-strapped U.S. airlines will be back in the market to order new airplanes. United won't need new aircraft any time soon, Brace said, since the average age of its fleet is 11 years old. Once United begins to beat forecasts laid out in its five-year business plan, the airline will look at purchasing new aircraft, Brace said.
Shares of Elk Grove Village, Ill.-based UAL Corp. rose 10 cents to $35.53 in midday trading Wednesday on the Nasdaq Stock Market.
