This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

UAL: Ted Better Off Dead

CHARLOTTE, N.C -- Give Ted credit. Most likely it was doomed from the time it began flying in 2004, yet it lasted far longer than expected.

United Airlines, a unit of UAL (symbol), said Wednesday it will close Ted, a low-fare airline within an airline, in 2009 and reconfigure its 56 A320 aircraft with first-class seats. Ted serves leisure destinations from Denver and other United hubs.

Oddly, Ted started after a series of similar experiments in the airline industry had failed.

"There were many examples preceding Ted where split-personality airlines simply didn't work," says aviation consultant Scott Hamilton. "Despite this history, UAL management thought they had a better mousetrap."

Like its predecessors, Ted represented a legacy carrier's effort to mimic Southwest (LUV - Get Report) and other low-cost competitors by starting a unit with lower fares, lower costs, all-coach seating and quicker turns.

In every case, it turned out to be impossible to strip out enough of the costs from the legacy model to compete effectively with low-fare carriers. One indication of this syndrome was that the legacy carriers almost invariably refused to break out financial results for their low-fare operations.

To be sure, Ted was part of a second round of experimentation, along with Song by Delta (DAL - Get Report). The first round generally involved older aircraft and uninspired marketing, while Song and Ted focused on a hip image and occasional amenities. Ted even used relatively new A320 aircraft.

Nevertheless, the basic problem did not go away, and most experts were sour on Ted from the start. "When it started, I said that in five years it would be a footnote in the financial statement," says aviation consultant Robert Mann. "It may have taken a little longer, but the result was the same.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
CAL $32.56 0.00%
DAL $40.00 0.00%
JBLU $20.63 0.00%
LUV $32.51 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs