6 July 2009 – According to an article in the Chicago Tribune, United Airlines may be bracing for another rough patch. As spending has declined, United’s ability to secure funds has become more difficult. Business has cut back on business flights and consumers have cut back on taking vacations. United has had to use it’s assets to secure loans. If that wasn’t bad enough, low cost carriers have hampered the airlines ability to raise fairs.
According to the Tribune article, United’s financial future will come in to question around Winter 2010 as the airline will need to raise it’s cash reserves to meet creditors unrestricted cash requirements. The article goes on to mention that one of the few breaks the airline has had go its way is the hedges the airline has had in place for 2009. But in my opinion, unless we see an a recovery in the economy where we see businesses booking flights and people have the confidence with their job where they feel that they can book a vacation, United looks to have some turbulance on the horizion. I do not see a Government bail out in the forecast and I am not sure that the Government will stomach a merger either.
If United does survive, I would expect to see a their frequent flier program heavily paired down. I would also expect to see more fees at check-in and for services during the flight. I just hope United does not go the route of Ryanair where we go from having proper seats to stools so that they can cram more passengers on board. Time will tell if United survives and in what form.
Reference: Johnnson, Julie, “Cash squeeze may put United Airlines in a bind,” The Chicago Tribune, 5 July 2009
