United Airlines Aims for $2 Billion in Cost Savings

united airlinesJoshua Freed, The Associated Press, November 19, 2013

United Airlines said that it will cut costs, overhaul its website, and shift flying from Asia to Europe as it aims to keep shareholders happy.

An airline spokeswoman said the plan, announced in a presentation to investors, does not include furloughs.

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United says it is aiming to burn less fuel, make workers more productive, and improve its maintenance processes. It has been working with its mechanics' union to revamp which maintenance jobs are done by the 2,000 workers at its San Francisco maintenance center, said Greg Hart, who runs the airline's technical operations.

United said it will overhaul its United.com website in phases starting next year.

The airline has been struggling to run smoothly and produce consistent profits since merging with Continental in 2010.

S&P Capital IQ analyst Jim Corridore wrote in a note that he's "very positive" on United's goals, but the airline hasn't consistently executed its plans. "We would like to see some traction on these plans," he wrote.

United is also adjusting where it flies. In March it will stop flying between Seattle and Tokyo under intense pressure from Delta Air Lines Inc. United will instead add a second daily flight to Tokyo from its biggest hub, Houston.

United partner All Nippon Airways still flies Seattle-Tokyo.

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Delta is United's archrival on Asia flying. It has two daily flights from Seattle to Tokyo, including a recently-added flight to Haneda airport, which is popular with business travelers because it is closer to Tokyo's downtown.

United is also dropping some flights within Asia, including Tokyo-to-Bangkok, and using a smaller plane for Tokyo-to-Seoul. It will still connect passengers on those routes through partner ANA.

Those planes that had been used in Asia will be shifted to new flights from Houston to Munich, and new seasonal flying from Washington to Madrid and Chicago to Edinburgh, Scotland.

United expects to boost overall 2014 flying capacity by 1 percent to 2 percent.

Investors have been watching for United to catch up with Delta in providing reliable profits.

So far this year United posted a first-quarter loss, then two quarterly profits. It's expected to break even during the fourth quarter. Delta has been profitable all year, and is expected to be in the fourth quarter, too.

United said it will begin returning cash to shareholders by 2015. The company didn't say how, but returning cash typically involves paying a dividend or buying back shares. Delta reinstated a dividend in September.

Shares of Chicago-based United Continental Holdings Inc. rose $1.81, or 5 percent, to $38.19 in morning trading. The stock is up 28 percent over the past three months.