United Changes To Add Up To USD$3.1 Bln A Year

United Airlines says it will generate billions of dollars from no-frills fares, fewer delayed flights, cost cuts and other efforts.

United said it expected an additional USD$3.1 billion in operating income per year by 2018, although rising wages, fuel and airport costs would partly offset that.

The company expects USD$1.5 billion of the benefit to come from ongoing airfare plans, including about USD$150 million from cheaper ticket offerings that may disallow advance seat assignments. This follows Delta's similar move to compete against discount rival Spirit Airlines.

The company also said passenger unit revenue would fall by 6.5 to 7.5 percent in the second quarter from a year earlier, compared with earlier expectations for a drop of up to 8.5 percent, as sales to Latin America, Europe and the Middle East have been higher than expected.

The estimate of the operating income gain marks a new push by United for transparency with investors, who have sought details on how it intends to match Delta in on-time arrivals, satisfaction scores and profit margins. The plans themselves are not new.

"Acknowledging where we went wrong is an important step in our recovery," chief executive Oscar Munoz said. United has higher costs than peers, "some of which is structural and much of which is under our control."

Lower domestic capacity on United has meant a smaller choice of flight times for corporate customers, which has pushed them away, Chief Revenue Officer Jim Compton said.

United has begun to win customers back with fewer delays this year, Munoz said. Increasing aircraft use and having to place fewer customers on other carriers' flights when theirs are cancelled will create a USD$300 million annual benefit, the company said.

Munoz said United in coming months would refine its strategy, such as how often it flies from Houston, where oil industry clients are spending less on travel.