Regional partners of United Airlines may benefit from the US major’s decision to dramatically slash mainline capacity, as routes currently operated with Boeing 737s are down-gauged to regional jets.
Speaking today at Merrill Lynch’s global transportation conference in New York, United CFO Jake Brace said the carrier does not have current plans to change its regional structure and "right now that capacity remains in place".
He says some of United’s 737 routes will be down-gauged to 50- to 70-seaters, which are operated by regional affiliates under the United Express banner.
Earlier this month United announced plans to remove a total 100 mainline aircraft, including its 94-strong 737 Classics fleet and six Boeing 747s. About 80 aircraft are expected to be out of the system by the end of 2008, with the other 20 coming out by the end of 2009.
"We don’t think about those planes [737s] coming back," says Brace.
United has additional unencumbered aircraft in its fleet. Should the carrier need to further cut capacity, its collective bargaining agreements with labour "allows us more room" to shed aircraft, says Brace.
In a filing yesterday with the US Securities and Exchange Commission (SEC), United revealed it expects to record "significant non-cash accounting charges in the second quarter" related to the possible impairment of goodwill, engine and spare parts inventory, and aircraft, as well as possible impairments of other tangible and intangible assets.
Additionally, the company also expects to record other, primarily non-cash, second quarter charges "for severance and the termination of certain contracts in conjunction with the capacity and staffing reductions" already announced.
At present, however, United says it is unable to accurately estimate the amounts and timing of these charges.
Source: FlightGlobal.com
