How long until United drop one of their Australian flights?

[NickN]

I was reading that United managed a very small profit last quarter however load factor continued to fall and they have advised they will decrease International capacity by a further 7%.

How long will it be before they either kill one of the B744 services or downgrade to a 777 variant on at least one of the routes?

[Ellis Taylor]

It has been interesting that UA have been the first to trash their yields by trying to undercut everybody else on the route.

I think we'll see them drop one of their services before they downgrade to a 772ER because, as I understand it, the aircraft would have to be payload limited to make it to SYD. I think Delta and V Australia are hoping to push UA into a corner where they may decide to drop their LA flights and instead pass more pax through SFO, where UA has a decent sized hub. Having said that, I think that UA will be holding out for a while, probably more on principle than profit.

[NickN]

Here is a story on MH that might interest you.

Malaysia Airlines (MAS) posted a 876 million ringgit ($250 million) net profit in the second fiscal quarter due to fuel hedging profits.

It actually made an operating loss of 421 million ringgit for the three months ending 30 June but a 1.38 billion ringgit gain from fuel hedging contracts pushed it into the black, MAS says to the Malaysian stock exchange.

This meant it made a net profit of 876 million ringgit compared a 62 million ringgit net profit for the corresponding period last year, it says.

MAS' operating revenue in the period fell 32% to 2.5 billion ringgit from 3.7 billion ringgit.

This is below operating expenses which came in at 3.0 billion ringgit, down 19% year-on-year from 3.7 billion ringgit.

"The group recorded an operating loss of 421 million ringgit for the second quarter ended 30 June 2009 mainly due to lower operating revenue in line with the declining trend in global travel and cargo movements resulting from the current economic downturn," it says.

Airline operating revenue fell 52% to 2.3 billion ringgit from 4.8 billion ringgit and cargo operating revenue fell 49% to 380 million ringgit from 739 million ringgit, it adds.

MAS says: "The outlook for the third quarter of 2009 is expected to remain soft."

"While there are some signs of improving economic climate, the airline industry is still faced with weak demand and downward pressure on yields. The operating environment remains volatile with the H1N1 pandemic impacting travellers' confidence."

It says: "To overcome the soft demand and adverse competitive environment, MAS continues to fast track the implementation of its

business transformation plan."

MAS also says it "has aggressively pushed sales by offering various fare promotions."

The airline's CEO, Idris Jala, says: "We are managing well in this crisis."

"While the operating environment remains tough, the load factors have increased due to our aggressive strategies to boost sales." "On the domestic front, more passengers are travelling with us [and] on the international routes, we have performed better than the industry average as we are less dependent on the front end".

He says: "We expect the economy to recover next year and are looking forward to take delivery of our new Boeing 737-800s in 2010 to capture the expected growth."

Jala says: "We will increase our frequencies into key ASEAN capitals, South Asia, China and offer more flights to certain points in Australia."

"In the Middle East, we are looking at expanding our services into at least three new destinations," he adds.

[Andrew M]

I have thought for years that UA would pull out of Australia, especially after the closure of the RCC in SYD. Yet the MEL one still operates.....

With the pressures from the A380, VA and DL I am even more surprised they are still flying down here.

Loads are still very good from what I am hearing.

[Mike W]

Originally Posted by Andrew M

Loads are still very good from what I am hearing.

I suspect it's the connections that are making the difference. I've spoken with a few Americans recently who admit UA isn't the best but they proclaim it as "Their Airline" and will continue to use it

[Andrew P]

What I would like to know the breakdown of American using the 4 services and the split between the 4 (i.e. tickets sold in the USA)

UA & Delta/Northwest have a natural American profile, QF has built up a US profile over years, but I expect 99.8% of Americans have never heard of V Australia.

This must hurt V Australia ticket sales.

Banjo

[NickN]

For some reasons Americans have a fascination and love for Qantas.

One of my family members just booked a flight with UA, Sydney-LA-Denver return for AU$1100 return in Premium Economy. I almost choked when I heard how cheap that was.

[Adam G]

Originally Posted by Mike W

I suspect it's the connections that are making the difference. I've spoken with a few Americans recently who admit UA isn't the best but they proclaim it as "Their Airline" and will continue to use it

It's also frequent flyer miles - american's can be very loyal to particular airlines even if they aren't great to get or redeem miles.

[Andrew M]

Originally Posted by NickN

One of my family members just booked a flight with UA, Sydney-LA-Denver return for AU$1100 return in Premium Economy.

If you call UA's Y+ much better than standard Y then yes it is cheap

Nothing more than a bit of legroom, I would rather VA or QF A380

[NickN]

I don't have any knowledge of what UA's Premium Economy product is like but hey is you get a little more legroom for that price then so be it.