Financially strapped United Airlines yesterday slashed prices as much as 20 percent on fares aimed at vacationers in an effort to boost revenue in the traditionally weak post-holiday travel period while it also seeks major cuts in labor costs.
United, which is operating under bankruptcy protection, reduced fares by about 10 percent on domestic flights and 15 to 20 percent on international flights.
The discounts require a 14-day advance purchase and a Saturday night stay. Tickets must be bought by Dec. 31. The discounted flights will begin Jan. 1 and must be completed by April 4. Some international flights have a Jan. 13 through March 14 timetable.
Other carriers, including American, Continental and US Airways, matched United's discounts.
Also yesterday, Chicago-based United said that next month it will furlough 646 mechanics, or about 5.5 percent of its mechanic workforce. The cuts will mostly be made at operations in Indianapolis, San Francisco and Oakland, Calif. The layoffs are part of United's previously announced 6 percent reduction in operations systemwide for the spring.
United is trying to secure $2.4 billion over six years in pay, benefit and work rule reductions from its labor groups, more than twice what the unions had tentatively accepted before last week's bankruptcy filing. When it filed for bankruptcy, the world's second-largest airline said it was losing nearly $22 million a day.
United has said it must obtain the larger concessions by Feb. 15 to obtain about $700 million in bank financing that it needs to support operations. On Tuesday, United's parent company, UAL Corp., said that on Dec. 26 it would begin the process of seeking bankruptcy court permission to nullify its labor contracts if no agreements are reached with the unions by then. Joe Tiberi, a spokesman for United's mechanics union, the International Association of Machinists, said yesterday that the union was reviewing United's proposals and that no negotiations have been scheduled.
United hopes the fare cuts can boost its passenger revenue. Airlines have traditionally used fare sales to raise cash quickly, especially during weak economic and seasonal travel periods. Earlier this summer, a month before it filed for bankruptcy protection, US Airways slashed ticket prices as much as 40 percent.
United's fare sale is much less dramatic and probably will yield much more modest results. That's because United reduced fares on its cheapest tickets, aimed at leisure travelers. Ray Neidl, airline analyst at Blaylock & Partners LP, said that if United had wanted a big revenue boost, at the risk of sparking a major fare war, it would have cut prices on the more expensive and less restrictive walk-up fares used by most business travelers.
United spokesman Chris Brathwaite said the airline launched a similar fare sale last year around the same time. Brathwaite said the sale was mainly aimed at stimulating travel "around what is typically a slow travel period."