Productivity Trumps Fuel Costs at UAL

United said it has captured $300 million in cost and revenue benefits targeted for 2006, as well as $135 million that was sought for next year. As a result, mainline cost per available seat mile, excluding fuel and special items, was 7.08 cents, down by 0.4%. Meanwhile, mainline passenger revenue per available seat mile rose 10.2%.

Consolidated capacity rose 3.1% and is expected to climb just 1% in 2007, driven entirely by higher aircraft utilization.

United said the impact from security changes following the disclosure of a failed terrorist plot in the U.K. to blow up airplanes was "nonmaterial." While several low-cost carriers have identified significant impacts, Brace said "we were solidly booked going into it [and suffered] less customer disruption than others did."

Tilton reiterated his long-standing contention that consolidation would benefit the industry, but acknowledged that industry response has been muted. "I think the reaction has been personal [to individual companies]," he said. "Other industries have benefited, but at the end of the day it's at the discretion of individual participants."

As of Sept. 30, UAL's cash position was $4.9 billion, including $860 million in restricted cash. "We clearly have more cash than is optimal," said Brace. "Our first priority will be to reduce debt levels."