Valley carriers America West Airlines and Mesa Airlines say they could benefit from United Airlines’ plan to scale back the number of flights it has in United States in an effort to cut costs and get out of bankruptcy.
UAL Corp., United's parent, said Wednesday it will curtail its domestic flights in favor or expanding international routes. The company is facing increasing pressure in the U.S. market from low-cost, low-fare airlines like America West, Southwest Airlines and JetBlue Airways.
United, the world's second-largest carrier, said it will be offering slightly fewer departures per market in the United States and flying more regional jets as it reduces its domestic capacity 12 percent by March 2005.
East Phoenix-based Mesa Airlines, is a regional carrier for America West and United.
“It certainly could be helpful for the industry for them to reduce,” said Janice Monahan, America West spokesman. “We've been saying overcapacity is a problem for some time now. It has an impact on pricing power.”
While United did not specify which routes it would cut, Monahan said a general downsizing of flights may mean new customers for America West because it competes with United on nonstop, direct flights between America West's two hubs, Phoenix and Las Vegas, and United's five hubs in Chicago, Denver, Washington Dulles, San Francisco and Los Angeles.
“There's also potential for us to see benefit even if we're not on the same direct route,” Monahan said. “If they're eliminating service from East Coast states to West Coast states, we could still see some benefit there.”
Linda Larsen, a spokeswoman for Mesa Air Group, Mesa Airline's parent, said United is wise to pull out of unprofitable flights.
“Actually, it's a positive for the company,” she said. Mesa Air operates in the West and Midwest as United Express.
While United said it plans to increase its use of regional jets, Larsen said it was too early to tell if the move will result in more or less business for Mesa Air. United has a low-fare carrier called Ted.
In the past, Mesa Air CEO Jonathan Ornstein has said he is more worried about the company's relationship with US Airways than with United.
Anything that helps United to profitability is good for Mesa Air, which garners 25 percent of its revenue from the company, Larsen said. United Express has more than 200 departures per day, she said.
Forbes.com reported Wednesday that Credit Suisse First Boston expects US Airways and Delta Air Lines, if if files for Chapter 11 in coming weeks, to be the next major sources of capacity reductions.
“CSFB said it continues to believe that airline shares are extremely beaten down and recommended: American Airlines, Alaska Air Group, Northwest Airlines, America West, Continental Airlines and Southwest,” Forbes said.
United, which has been in bankruptcy for 22 months, said it will increase international capacity by 14 percent as it looks to its more lucrative overseas routes — particularly those to China, Japan and Vietnam — to help it return to profitability after four straight years of losses.
United said the moves will reduce overall capacity by 3 percent and shrink its fleet to 455 aircraft by next March, down from 523 in August and nearly 20 percent since 2002.
- The Associated Press contributed to this report.