United plans flat capacity through 2010
By Perry Flint, ATW Online | Jan. 11, 2006
United Airlines will keep mainline capacity flat at 140.9 billion ASMs in each of the five years 2006-10 inclusive.RPMs also are expected to be flat. The carrier sees scheduled passenger RASM climbing from 9.32 cents per ASM to 10.26 cents over the forecast period. It provided the guidance in a filing with the US Securities and Exchange Commission Monday. It also sees nonfuel operating CASM for the mainline rising from 7.47 cents in 2005 to 8.29 cents in 2010.
According to the filing, 2005 will be United's last unprofitable year in this decade. For 2006 it expects to post an operating profit of $915 million on sales of $17.78 billion. Owing to adoption of fresh-start accounting upon exit from bankruptcy, it will show a special noncash gain of more than $11 billion, pushing the net figure to $11.6 billion. For 2007 it foresees revenues rising 3.4% to $18.4 billion while operating profit jumps 49% to $1.4 billion.
The forecasts are based on crude oil prices of $50 per barrel with a $6.72-per-barrel crack spread. Should fuel prices climb higher, the carrier expects to be able to raise fares, citing "a direct correlation between fuel prices and ticket prices when crude oil prices exceed $50 per barrel." It estimates it could recoup "approximately 60% of the higher fuel cost through higher fares," permitting it to stay profitable throughout the period.
In the same document, United projected a $311 million operating loss in 2005 on sales of $17.1 billion. Net loss was estimated at $5.3 billion owing to bankruptcy-related items.