UNITED AIRLINES parent company UAL Corporation is speeding up plans to put the airline on a healthier footing partly by redeploying aircraft to more profitable routes and reducing the mainline fleet. Chairman Glenn Tilton said the strategy had always been to align fleet size and deployment with market conditions, which were "brutally competitive". He added: "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 United remains competitive."
United says fleet modifications to be implemented by next March will reallocate assets to more profitable routes by expanding and strengthening international services, which will account for over 40% of United”s global capacity and 50% of mainline revenue when fully implemented. Some domestic US routes will be shifted to United Express. The mainline fleet will be cut to 455 aircraft ” 68 fewer than United flew in August 2004 and a reduction of 112 aircraft, or nearly 20% of the fleet, since 2002.
The changes will result in international available seat miles (ASMs) increasing by 14%, with United mainline domestic ASMs declining by 12% for a total systemwide ASM decline of 3%.
United pledged to continue to operate its five hubs in Chicago, Denver, Washington Dulles, San Francisco and Los Angeles.
United”s present product portfolio includes United mainline, serving high-yield business travellers; United Express, providing service to smaller US 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 worldwide. United said it was continuing to cut costs to competitive levels and was on track to achieve $5 billion in annual cost improvements by 2005.
John Tague, United”s executive vice president ” Marketing, Sales & Revenue, summed up: "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 past 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."
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