United Accelerates Plans to Optimize Worldwide Network

United Airlines has said it is substantially accelerating the company’s plan to expand its international role, redeploy aircraft to more profitable routes and reduce the overall size of its mainline fleet.

“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 Express (UAX).

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.”

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 airports.
Four new partners have joined the Star Alliance since late 2002, with two additional new partners scheduled to join in 2005.

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