20-Nov-2013 5:52 AM

United Continental Holdings unveils plans for USD2bn in cost cuts

United Continental Holdings unveiled (19-Nov-2013) plans to cut costs by USD2 billion over the next four years, while increasing its ancillary revenue by USD700 million to USD3.5 billion p/a. United stated it will look to make savings in the following areas:

  • Fuel consumption: USD1 billion in savings, largely through the use of more fuel efficient aircraft. United is aiming for a 7% improvement in fuel efficiency by 2017;
  • Maintenance: USD100 million in savings, by realigning "work with core competencies" and implementing "lean practices";
  • Productivity: USD500 million in savings, through improved efficiency and the deployment of self-service technology;
  • Sourcing: USD150 million in savings, by reducing sourcing costs "through total cost of ownership";
  • Distribution: USD100 million in savings, by shifting the "traffic mix towards optimal distribution channels."

The company expects to grow capacity "below GDP", at a rate of between 1% and 2% through 2017, while decreasing its CASM 10%-15% to around USD0.65. United estimated capex at between USD2.8 billion and USD3 billion p/a for the period 2014 through 2017. United Continental Holdings president and CEO Jeff Smisek said: "These past few years, in many ways, have felt like we've been managing a merger and not an airline...and now we get to manage an airline" (The Wall Street Journal, 19-Nov-2013). [more - original PR]