United Airlines - the wholly owned subsidiary of
United Continental Holdings Inc.
) - is offering premium flat-bed cabin seats on every scheduled
transcontinental flight between New York's John F. Kennedy
International Airport and San Francisco/Los Angeles. The company
is the first U.S. airline to offer this premium service.
The revamp of the fleet is part of the company's ongoing
efforts to enrich its in-flight passenger experience. The
restructuring includes redesigning 15 of its
The Boeing Co.
) 757-200 aircraft that will fly on the transcontinental
The aircraft facelift will be particularly beneficial for
corporate travellers as the Chicago-based carrier will now have
28 flat-bed first class seats with up to 6 feet 4 inches of
sleeping space and additional storage. Further, the aircraft will
have 42 Economy Plus seats with additional legroom. These
amenities necessarily enhance the flying experience by adding to
the comfort level of passengers. In turn, these improve the
company's churn rate.
United's refurbished fleet will also include, Wi-Fi, on demand
entertainment, USB ports, power outlets along with multi-course
meals for its BusinessFirst customers. Expansion of flat-bed
seats on coast-to-coast route would be a notable development as
the company so far offered such comfortable options only on
long-haul international flights.
We tag this attempt as a strategic one as the company seeks to
tap the business and travelling customers on either side of the
coast. It will not be easy for United, given the strong presence
Delta Airlines Inc.
JetBlue Airways Corporation
) in New York. However, if United can competitively price its
fare, the fleet revamp might yield positive results.
Apart from aircraft designing, United recently chalked out
plans to overhaul its finances as the airline behemoth has
financially underperformed its domestic peers in recent times.
The passenger airline plans to reduce its annual costs by $2
billion by cutting fuel cost, reducing sourcing cost, improving
maintenance and optimizing distribution channels. We believe that
fleet renovation coupled with the attempt to restructure its
finances could improve the overall performance of the
United currently carries a Zacks Rank #3 (Hold).
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