United Airlines expects to make few fleet changes in 2008 and may perhaps slightly reduce its aircraft inventory as it maintains a rigid focus on controlling cost.
The airline reported third quarter results on October 23 showing that operating costs rose only 0.6% compared to the same period a year earlier, even as net income jumped 81% to $295 million.
United’s focus is on fiscal discipline as fuel costs continue to rise from a $75 per barrel average in the third quarter to $88 per barrel reported earlier in October.
“The fleet we have right now is the fleet we’re going to want next year,” said Jake Brace, executive vice president and chief financial officer.
From July to September, the company’s channeled capital expenses away from buying new aircraft to completing refinancing deals and paying down debt. United spent $150 million to purchase three previously leased aircraft at more favorable terms.
However, United’s fleet inventory of 460 mainline aircraft did not change during the third quarter, and is not likely to budge into the future. United trimmed overall capacity, as measured by available seat miles, by 1.5% compared to third quarter 2006. The capacity cuts include a 4.6% reduction in North America.
“Continuing our discipline in capacity planning and allocation delivered resultsthat are among the best in the industry,” John Tague, executive vice president and chief revenue officer, said in a statement.
The same strategy to focus on balance sheets at the expense of fleet investment is likely to remain in 2008.
“We have some aircraft coming off lease next year so we can adjust downward if we want,” Brace said. “We could adjust upward with some additional regional capacity. [But] with fuel this high it’s unlikely we’re going to want to do that.”
Source: FlightGlobal.com
