<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by GGpillow:
As part of its second-quarter financial results,
United today unveiled its strategic plan. The plan
sets out goals and direction for the company, with a
focus on bringing costs in line with lower revenues.
"We looked at what is happening in the industry and
at United," said President Rono Dutta. "Our goal
was to identify every meaningful cost-saving and
revenue-generating idea. We started by looking at
our assets -- and we have some of the best assets in
the business.
"We have hubs in all the right cities, a modernized
and simplified fleet, a large and very loyal
frequent flier base and a high-end product. We also
have a dedicated group of 83,000 people supporting
those assets every day."
With those strengths well-established, Dutta and his
strategic initiatives team looked at whether or not
those advantages still held in an environment where
high-yield revenue has dropped dramatically.
"We looked at a major restructuring of the airline,
such as significantly shrinking or focusing on
leisure, and ultimately rejected them as
unworkable," Dutta said. "We also looked at our
pricing structure and we have not identified any
alternative that can bring in as much revenue as our
current system. Finally, we determined that the
customer convenience and revenue benefit from the
hub-and-spoke scheduling system dwarfs any cost
inefficiencies the system brings.
"Our conclusion was that we have one true weakness:
we are a high-cost carrier. With our current cost
structure, we determined we can't completely
overhaul our airline. It's hard enough to be a
high-cost carrier in a high-end business market. It
would be worse to try to be a high-cost carrier in a
low-end leisure market."
As a result, Dutta and his team are focusing their
efforts on using United's core and historic
strengths to compete in the new industry
environment. They will concentrate on six areas:
* increasing network efficiency through actions such
as code shares, alliances and regional jets
* reducing the cost of sales
* seizing opportunities to improve the management of
air traffic and irregular operations
* examining areas of under-performance by
distribution channel and customer segment
* reviewing all premium products to ensure they are
cost effective
* improving process and productivity, particularly
in airports and maintenance.
"We are still looking for significant workable ways
to change the business model," Dutta says, "but in
the meantime, we are aggressively implementing the
opportunities we have identified so far." </font>
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Please also see:
http://www.flyertalk.com/forum/Forum.../008730-2.html