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United flies out of bankruptcy
After the longest bankruptcy in airline history, United left Chapter 11 leaner and more cost-efficient, according to industry observers.
United’s painful restructuring began in 2002 and lasted a record 1,150 days.
Said Glenn Tilton, CEO of United and parent UAL Corp., in a statement:
“We have achieved a great deal in our restructuring to reposition this company and build upon our assets, an unrivaled global network and our dedicated employees,”
But in an apparent acknowledgment that United still hasn’t posted a profit since 2000, he added: “We can be better.”
In common with other US carriers, United reported a net loss last year of $21 billion. But officials of parent company UAL said the airline “outperformed the industry in revenue improvement.”
Citing higher fuel costs as a problem, Mr Tilton said the airline would return to profitability by continuing to “contain costs, apply sound revenue management and deliver consistent service to our customers.”
Passengers were not impacted since the airline continued to be operational but today it is a changed company.
United has about 30% fewer employees (58,000), 20% fewer airplanes (460) and 20% lower operating costs (7.5 cents per seat per mile), excluding fuel, than it did when the bankruptcy began.
Labor costs are down by more than $3 billion annually after two steep pay cuts and the elimination of defined-benefit pensions. Dozens of daily domestic flights have been eliminated.
On the other hand, international routes are up. On-time arrivals are also up.
The big cloud on the horizon for United and other carriers remains near-record fuel prices, which are likely to extend its money-losing streak by at least another year, according to the Associated Press.
Tilton said, however, that until the airline industry “sorts itself out,” an immediate return to profitability should not be the primary gauge of whether United succeeded in Chapter 11 bankruptcy.
The latest airline to report a loss was JetBlue, which this week attributed its $20.3 million loss last to rising fuel prices that offset increases in passenger revenue and higher passenger capacity.
Report by David Wilkening
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