United 1st Quarter Losses Over Half-a-Billion $$$
United Airlines lost $542 million in the first quarter. That's according to statement issued this morning by the airline. The loss was "driven primarily by a $618 million increase in consolidated fuel expense..."
Bad news like this is almost becoming old news. What's more noteworthy is what the airline says it's going to do about it; the following bullet points are pulled from the United statement:
- By the fourth quarter of 2008 mainline domestic capacity will be down approximately 9 percent year-over-year. This reduction follows a 5 percent reduction in the fourth quarter of 2007. Consolidated capacity will be approximately 4 percent lower than prior year levels for
the fourth quarter of 2008. - The company will permanently remove 30 narrowbody aircraft from its operations, 10 -15 more aircraft than initially announced last month. The aircraft being retired are some of the oldest and least fuel efficient in the company’s fleet.
- The company continues to take actions to pass rising commodity costs to customers. In addition to leading the industry in capacity discipline, United continues to be a leader of fare and fuel surcharge actions. The company is also creating new revenue streams through unbundling products, offering new a la carte services and expanding choices for our customers. The company’s existing merchandising programs,
such as Economy Plus and Premium Cabin upsell have been extremely successful and the company is following through with initiatives such as the $25 fee for a second checked bag announced in February. - The company expects to reduce its salaried and management workforce by 500 employees and its represented workforce by approximately 600 employees by year-end.
- The company is also reducing 2008 capital expenditures by approximately $200 million from $650 million in expenditures previously planned. “We continue to focus on cash flow and, with a strong cash balance and more than $3 billion in unencumbered assets, we are well positioned to manage the challenges ahead,” said Jake Brace, EVP and chief financial officer. “We are responsibly reducing our fleet, eliminating less efficient aircraft that are not profitable in this fuel environment.”
From the customer's point-of-view, here's the bottom line: United will reduce service nation wide and ticket prices will go up.
Kent
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