GogglesPisano
Pawn, in game of life
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From ATWOnline:
United considering consolidation options, sees 'pretty flat capacity growth'
Wednesday December 13, 2006
United Airlines Chairman, President and CEO Glenn Tilton said yesterday that the carrier is actively exploring consolidation options as it closely follows the proposed US Airways takeover of Delta Air Lines.
Speaking at the airline's Investor Day conference, which was available via webcast, Tilton said UA is "as focused" on potential consolidation as it is on post-bankruptcy cost-cutting. "We are not waiting for opportunities to come to us," he told investors and analysts. "We're very mindful of everything that's happening [regarding US/DL] and we're paying attention." He said the carrier is conducting a "rigorous" analysis of "options available."
UA highlighted its strategy of "cost containment and improved efficiency" in a series of presentations in which it touted a strong post-Chapter 11 financial position. Parent UAL Corp. earned net income of $190 million in the third quarter, its second straight profitable quarter following a lengthy restructuring (ATWOnline, Nov. 1).
But executives conceded that substantive growth is unlikely--thereby limiting the scope of future cost-cutting--without consolidation. UA remains committed to its current fleet size, believing that operating too many aircraft was part of what led to bankruptcy. Executive VP and CFO Jake Brace said the carrier will have "pretty flat capacity growth going forward...We're going to live with the fleet we have." It plans to operate 750 aircraft in 2007, down from 822 in 2003.
"The opportunities we have available to us [to keep driving costs down independently] are clearly limited by the size of the enterprise," Tilton said, noting that inflationary costs are difficult to match in terms of revenue growth if UA remains the same size. "If you take the opportunity to enlarge [through a merger], then [new cost] synergies are possible...The idea [behind a merger] is to create synergies out of differences. The idea is to say, 'This is what you do well, this is what we do well, now let's put it together and generate synergies.'"
Brace said United has more than $4 billion in cash available, which is "more than we need." The company said it already has achieved $135 million of the $400 million in annual cost savings targeted for next year and expects "close to flat" growth for CASM excluding fuel and profit-sharing in 2007.
by Aaron Karp
United considering consolidation options, sees 'pretty flat capacity growth'
Wednesday December 13, 2006
United Airlines Chairman, President and CEO Glenn Tilton said yesterday that the carrier is actively exploring consolidation options as it closely follows the proposed US Airways takeover of Delta Air Lines.
Speaking at the airline's Investor Day conference, which was available via webcast, Tilton said UA is "as focused" on potential consolidation as it is on post-bankruptcy cost-cutting. "We are not waiting for opportunities to come to us," he told investors and analysts. "We're very mindful of everything that's happening [regarding US/DL] and we're paying attention." He said the carrier is conducting a "rigorous" analysis of "options available."
UA highlighted its strategy of "cost containment and improved efficiency" in a series of presentations in which it touted a strong post-Chapter 11 financial position. Parent UAL Corp. earned net income of $190 million in the third quarter, its second straight profitable quarter following a lengthy restructuring (ATWOnline, Nov. 1).
But executives conceded that substantive growth is unlikely--thereby limiting the scope of future cost-cutting--without consolidation. UA remains committed to its current fleet size, believing that operating too many aircraft was part of what led to bankruptcy. Executive VP and CFO Jake Brace said the carrier will have "pretty flat capacity growth going forward...We're going to live with the fleet we have." It plans to operate 750 aircraft in 2007, down from 822 in 2003.
"The opportunities we have available to us [to keep driving costs down independently] are clearly limited by the size of the enterprise," Tilton said, noting that inflationary costs are difficult to match in terms of revenue growth if UA remains the same size. "If you take the opportunity to enlarge [through a merger], then [new cost] synergies are possible...The idea [behind a merger] is to create synergies out of differences. The idea is to say, 'This is what you do well, this is what we do well, now let's put it together and generate synergies.'"
Brace said United has more than $4 billion in cash available, which is "more than we need." The company said it already has achieved $135 million of the $400 million in annual cost savings targeted for next year and expects "close to flat" growth for CASM excluding fuel and profit-sharing in 2007.
by Aaron Karp
