United Airlines, unit of

UAL

(UALAQ)

, announced specifics Wednesday on its long-awaited plan to launch a low-cost carrier, which will debut in February 2004 under the name Ted.

The new unit, which is part of United's plan to restructure under Chapter 11 and will play a significant role in the future of the company, will be based in Denver and will offer limited service from Las Vegas and Phoenix.

"Ted isn't just a low-cost initiative; it also creates more revenue opportunity in leisure-focused markets," said John Tague, executive vice president. "Although Ted will be a United-branded product, it has been designed with a unique name and personality all its own. United chose the name Ted to emphasize that the service is an essential, integrated part of the company -- it's the last three letters of the company's name."

When it launches in February, service will primarily focus on short-haul markets emanating from the Denver hub, with flights to Reno; Las Vegas; Phoenix; New Orleans; Tampa; Orlando; Ontario, Calif.; and Fort Lauderdale, which is a new city for United. Outside of Denver, Ted will fly between Las Vegas and Los Angeles, Las Vegas and San Francisco, and San Francisco and Phoenix.

Ted will compete head-to-head with

Frontier

(FRNT)

, which has a Denver hub and currently serves all eight of the cities Ted plans to target. Ted will also compete with

America West

(AWA)

from Denver to Las Vegas and Phoenix.

Ted's route map also serves as a preemptive strike against other low-cost carriers like

JetBlue

(JBLU) - Get Report

. In the coming years, many low-cost carriers plan to expand by "connecting the dots" across their route maps, linking cities already served and offering new service.

Currently, JetBlue only offers service between Denver and New York, with plans to link Boston and Denver in January 2004. But when it debuts, Ted has targeted six markets in which JetBlue could potentially "connect the dots."

Ted's initial service offerings directly overlap routes currently served by Frontier, while also serving cities that other carriers may try to serve from Denver in the coming years.

Initially, Ted will be backed by four Airbus A320s that have been reconfigured to seat 156 passengers in a single class -- 18 more passengers than under a standard United two-class configuration. By the end of 2004, United said it plans to have as many as 45 planes serving Ted, with 19 of those based in Denver, which will be Ted's home.

United's announcement follows

Delta's

(DAL) - Get Report

launch earlier in the year of a low-cost unit called Song to compete head-to-head with JetBlue. With other network carriers, like

AMR

(AMR)

unit American Airlines, considering launching low-cost units if Song proves successful, the industry may be seeing more Teds in the coming years.

Shares of United, which will be worth nothing when the company emerges from bankruptcy, were up 4 cents, or 2.6%, at $1.39 Wednesday afternoon.