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United Continental Holdings Inc. is targeting $3.1 billion in savings and extra revenue by 2018 in a bid to close a profit gap with competitors.
The plan entails sales gains of $1.5 billion through increased customer segmentation, changes to the frequent-flier program and revenue-management gains, the Chicago-based carrier said in a statement Tuesday. United said it would save $1.3 billion from the use of larger planes and slimmer seats, and grab $300 million by winning over more premium customers and reducing the number of delayed and canceled flights.
Chief Executive Officer Oscar Munoz faces pressure to boost United’s profit, which on an operating basis amounted to 13.6 percent of sales last year. That compared with 15.1 percent for American Airlines Group Inc. and 19.2 percent for Delta Air Lines Inc. Munoz is scheduled to explain his revenue plan on a conference call with investors and analysts at 10 a.m. New York time.
Passenger revenue for each seat flown a mile, a crucial financial yardstick in the airline industry, will fall 6.5 percent to 7.5 percent in the second quarter, United said in the statement. It said earlier this year that the benchmark measure could fall as much as 8.5 percent.
©2016 Bloomberg L.P.
This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.