United Airlines' parent UAL
Yes, the country's second-leading air carrier has set its sights on positive earnings come 2004. Like too many airline departures these days, don't be surprised if it's late. While the 2004 target may sound overly ambitious for a troubled company that has posted just over $2 billion in losses over the past year, UAL really only has to convince the Airline Transportation Stabilization Board, which will decide its fate based on a loan guarantee deadline that's now just two weeks away.
United's plan is similar to that of other air carriers, which are scaling back flights, delaying previously placed orders for new aircraft, and expecting to spend less money on labor as a direct result. Specifically, United plans to trim its departure schedule by 6% and retire 49 more jets from its aging fleet. Then, 9,000 job cuts will reduce its payroll to just 74,000 employees. Along with deferring aircraft orders through at least 2006, it expects to save roughly $2.5 billion annually.
Like most corporate restructurings, the numbers may appear convincing on the surface, but questions still remain. Just how will the company compete with the low-priced carriers, given its seasoned industry salaries? If it continues to hold back on fleet replacements, will it have to sacrifice safety or brand quality? Will the various union groups agree that this is the best course for ultimate survival, or will it only foster bad blood down the road? These are questions that only time will answer. In the meantime, let's not forget the plane painting idea.