As part of the implementation of the updated business plan submitted to the Air Transportation Stabilization Board (ATSB) last night, United Airlines (NYSE: UAL) today announced this weekå‘s second round of cost-cutting measures that are expected to improve profitability by approximately $120 million annually. In response to current market conditions, the carrier will be closing four international stations and better matching capacity with demand by shifting to smaller aircraft in several markets. In combination, the U.S. domestic and international cost-cutting initiatives announced this week are expected to improve the carrierå‘s profitability by approximately $220 million annually.
Beginning Jan. 7, 2003, United will close stations in Caracas, Venezuela; Santiago, Chile; and Dusseldorf, Germany. On January 22, 2003, United will close its station in Milan, Italy. The closings will affect 69 employees in Caracas, 110 in Santiago, 46 in Milan and four in Dusseldorf.
The last flights will depart Dusseldorf, Caracas and Santiago on January 6, 2003, and will depart Milan on January 21, 2003. Customers already booked for travel beyond the last date of service will be offered reaccommodation on other carriers.
“Closing a station is always an extremely difficult decision to make, but given the unprecedented challenges the global airline industry faces, these closings are an essential and prudent course of action,” said Glenn Tilton, United’s chairman, president and chief executive officer. “These measures are unfortunately necessary given the continued deterioration of profitability in these four international markets. We regret the necessity of making these decisions because of the impact it will have on our customers, employees, their families and their countries,” Tilton continued.
“United will work closely with employees affected by these measures. Our goal is to be as helpful as we can be during this extremely difficult time for everyone,” said Tilton.
“These cuts come as a result of careful analysis of the stations’ profitability for the last several years,” said Graham Atkinson, United’s senior vice president - International. “Results from all four cities fall well below United’s profitability hurdles.”
While the company regrets today’s announcement, it remains strongly committed to its customers in the European and Latin America regions. United will continue to serve the needs of its customers to these affected locations in Europe and Latin America through its Star Alliance partners, Lufthansa and Varig.
In addition, the company will also better match capacity to demand by down gauging the equipment it uses in several markets. The company will fly Boeing 767 aircraft instead of Boeing 777 aircraft in the Paris-Washington Dulles, Paris-San Francisco and Miami-Buenos Aires markets. United will also replace Boeing 747s with Boeing 777s on the flowing routes: Osaka-San Francisco, United’s second Seoul-Tokyo flight and the carrier’s second daily Tokyo-Chicago flight. These down gauges allow the company to more efficiently operate these flights by using equipment that adequately meets the demand.
United operates nearly 1,900 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company’s website at www.united.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain information contained in this news release regarding the expected cost savings is forward looking and involves risks and uncertainties that could result in actual results differing materially from expected results. Forward-looking statements represent the company`s expectations and beliefs concerning future events, based on information available to the company at the date of this news release. Some factors that could significantly impact cost savings include, without limitation, the economy and the demand for air travel; the stability of the U.S. economy; changes to operating schedules and staffing; the economic environment of the airline industry and the economic environment in general. The company disclaims any intent or obligation to update or alter any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise.