UAL could ground planes if fuel gets too pricey
By Laura Mandaro, MarketWatch
Last Update: 8:08 PM ET Nov 7, 2007
SAN FRANCISCO (MarketWatch) - United Airlines, Inc. could ground 100 planes if fuel prices go so high that the flagship carrier of UAL Corp. needs to further trim its growth, said its chief financial officer late Wednesday.
Speaking to investors at an investment banking conference, UAL (UAUA UAUA
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<IMG class=pixelTracking height=1 width=1 border=0>UAUA) Chief Financial Officer Frederic "Jake" Brace said the Chicago carrier and its rivals have two major ways to deal with crude-oil prices approaching $100 a barrel:
"Either the industry passes on higher fuel prices or we're going to have to lower capacity," he said in the presentation, which was Web cast.
"We have a lot of flexibility in our fleet," he said, adding the carrier has more than 100 aircraft that it could ground or sell if oil prices get too high. It also has 13 narrow-body planes it plans to take out of service next year.
As far as fares, he said the industry "has done a pretty good job of raising fares, it will need to do a better job at raising fares to offset the price," of fuel.
Like other major carriers, United Airlines has been reining back its domestic flight offerings to make sure more seats are filled when it puts a plane in the air. Those cuts to capacity, which have been echoed by other large carriers, have helped it raise fares, a key element to the airline industry's nascent recovery.
In the third quarter, United Airlines said its traffic fell 0.3% but it cut its capacity even further, by 1.5%, driving up its load factor - or percent of seats filled. Its yields, or average fares, surged over 8%.
By Laura Mandaro, MarketWatch
Last Update: 8:08 PM ET Nov 7, 2007
SAN FRANCISCO (MarketWatch) - United Airlines, Inc. could ground 100 planes if fuel prices go so high that the flagship carrier of UAL Corp. needs to further trim its growth, said its chief financial officer late Wednesday.
Speaking to investors at an investment banking conference, UAL (UAUA UAUA
News, chart, profile, more
Delayed quote data
Sponsored by:
<IMG class=pixelTracking height=1 width=1 border=0>UAUA) Chief Financial Officer Frederic "Jake" Brace said the Chicago carrier and its rivals have two major ways to deal with crude-oil prices approaching $100 a barrel:
"Either the industry passes on higher fuel prices or we're going to have to lower capacity," he said in the presentation, which was Web cast.
"We have a lot of flexibility in our fleet," he said, adding the carrier has more than 100 aircraft that it could ground or sell if oil prices get too high. It also has 13 narrow-body planes it plans to take out of service next year.
As far as fares, he said the industry "has done a pretty good job of raising fares, it will need to do a better job at raising fares to offset the price," of fuel.
Like other major carriers, United Airlines has been reining back its domestic flight offerings to make sure more seats are filled when it puts a plane in the air. Those cuts to capacity, which have been echoed by other large carriers, have helped it raise fares, a key element to the airline industry's nascent recovery.
In the third quarter, United Airlines said its traffic fell 0.3% but it cut its capacity even further, by 1.5%, driving up its load factor - or percent of seats filled. Its yields, or average fares, surged over 8%.
