UAL Corporation, the
holding company whose primary subsidiary is United Airlines, today
announced it is substantially accelerating the company’s plan to expand
its international leadership, redeploy aircraft to more profitable
routes and reduce the overall size of its mainline fleet. These
actions are part of United’s ongoing strategy to leverage its product
portfolio and world-wide route network, reduce its costs to competitive
levels, continue to lead the industry in operational excellence and
further strengthen the company’s sharp focus on customers by investing
in innovative products and services.
“Our strategy has been to continually align our fleet size and
deployment with market conditions, which are brutally competitive,”
said Glenn Tilton, UAL’s chairman, president and chief executive
officer. “Fundamental changes in our industry, including ongoing high
fuel costs, intense pricing pressure and continuing over-capacity,
demand that we take aggressive steps now in implementing this plan to
ensure that United remains competitive.”
By March 2005, the company’s fleet modifications will:
* Reallocate assets to more profitable routes, expanding and
strengthening international routes, which will account for over 40
percent of United’s global capacity and 50 percent of mainline revenue
when fully implemented, and shifting some domestic routes to United
* Reduce United’s mainline fleet to 455 aircraft - 68 fewer aircraft
than United flew in August 2004 and a reduction of 112 aircraft or
nearly 20 percent of the fleet since 2002.
These changes will result in international ASMs (available seat miles)
increasing by 14 percent, with United mainline domestic ASMs declining
by 12 percent for a total systemwide ASM decline of 3 percent.
Tilton said, “While there is still more work to do to make our cost
structure competitive, the network model, with its broad connectivity
and its value for premium customers, remains viable today and in the
future. We will continue to maintain and strengthen the unparalleled
scope of our global network and will continue to operate our five hubs
in Chicago, Denver, Washington Dulles, San Francisco and Los Angeles.”
Tilton pointed out that the actions United is announcing are part of
United’s ongoing strategy to:
* Leverage Product Portfolio and Network: United’s product portfolio
and world-wide route network give United the flexibility to put the
right product in the right market at the right price to meet customer
demand while generating a profit for the company. United’s product
portfolio includes: United mainline, serving high-yield business
travellers; United Express, providing service to smaller domestic
markets and feeding passengers to the mainline; Ted, flying more
cost-conscious travellers to leisure markets from all five United hub
airports; and the Star Alliance, which extends United’s global network
to hundreds of destinations world-wide.
* Reduce Costs: United continues to reduce its costs to competitive
levels. The company is on track to achieve $5 billion in annual cost
improvements by 2005. In addition to the savings from a potential
termination and replacement of pensions, United is targeting more than
$1 billion in additional annual savings. No decision has been made on
pensions, and discussions with United’s stakeholders are continuing.
* Deliver Operational Excellence: United continues to lead the
industry in operational excellence. United employees have delivered
record-breaking performance metrics under some of the most difficult
and potentially distracting conditions in the company’s history.
United’s Success Sharing program rewards employees and helps align them
with the company’s business goals as United continues to implement
programs to streamline airport operations, maintenance and distribution.
* Focus on Customer Service and Investment: United maintains a sharp
focus on customers by investing in innovative products and services,
including expanding the availability of United EasyCheck-in and other
electronic and online ticketing and notification systems, and
introducing Ted and p.s.(sm), the company’s new premium flights serving
the West Coast from New York City.
John Tague, United’s executive vice president - Marketing, Sales &
Revenue, said, “The dynamics of today’s industry environment, with fuel
prices at an all-time high, require significant changes to address
industry over-capacity. For the last 24 months we have continued to
exercise discipline in adjusting capacity to meet market conditions.
With today’s change, United is moving faster to implement our plans and
leverage our international leadership.”
Tague detailed the steps the company has already taken:
* United launched 30 new international routes since February 2002 - 70
percent of those announced this year;
* United Express service has expanded to 21 new destinations;
* Ted now flies to eight leisure markets from all five United hub
* Four new partners have joined the Star Alliance since late 2002, with
two additional new partners scheduled to join in 2005.