|United Airlines Stock Rating Report (UAUA) Rating and Financial Analysis|
CHICAGO ( TheStreet) -- After leading network carriers in on-time performance in 2009, United ( UAUA) maintained its lead in the first half of 2010. On-time performance results for the first six months, released Tuesday by the Bureau of Transportation Statistics, show that United was first among the five network carriers in arrivals within 14 minutes of schedule, just as it was
first among six network carriers for the full year 2009.
Scott Dolan, United senior vice president for airport operations, said on-time performance has played a role in the carrier's financial resurgence, although the impact is impossible to quantify. "It's about when customers make a choice, especially schedule sensitive, high-yield business travelers," he said. "We can't break down how much of our current financial performance is due to this, but we know it has a major impact." From January 1 through June, United flights arrived on time 83.34% of the time, while 82.24% of US Airways flights were on time. Continental was third at 80.77%. Delta was fourth at 77.7%. Fifth was American at 77.18%. United improved to first in 2009 from fifth out of six network carriers in 2009. Dolan said the continued strong performance reflects continued focus on improving in three areas: execution, schedule adjustments and recovery following weather events. In terms of execution, United has empowered its station managers to tackle problems as soon as they occur, without trying to ascribe blame. Historically, airlines seek to resolve on-time problems during regularly scheduled conference calls. While station managers don't necessarily oversee such functions as maintenance, flight operations and crew performance, Dolan noted that they generally coordinate airport operations. "When a flight goes out late, we try to have people discuss it right then and there," he said. "Then we try to put the right resources in place to avoid
repeating the problem." For instance, United now works hard to ensure that flights start to board 30 minutes before departure -- not 27 minutes or 28 minutes. On flights with high shares of business fliers, who tend to avoid checking bags, United asks for volunteers to check bags. Then, when it begins boarding passengers with lower boarding priority, it insists on checked bags. It does not charge to check bags at this point in the process, because timeliness, rather than revenue, is the intent. United also works to avoid crew delays through better scheduling, and to assure it has more fleet service workers available on flights where checked baggage is historically heavy. The effort appears to be working: United arrivals within 14 minutes of schedule were up three points in the first six months of 2010.
Another change occurred at the Denver hub, which had faced delays. In Denver, United operates two major flight banks, when dozens of planes arrive and depart in less than two hours, enabling passenger connections. During the first quarter, the carrier added ground time during the morning bank, freeing extra minutes for baggage and passenger loading, cleaning and fueling. To maintain its existing level of aircraft utilization, the carrier reduced ground time for the afternoon flights. A guiding tenet of the airline business is that on-time morning operations are essential because once delays enter the system, it is generally impossible to exorcise them during the day. Additionally, United reaffirmed its commitment to reduce flying in advance of weather events, another strategy that other carriers including Delta ( DAL)
have implemented because it is so difficult to restart the next day when planes and crews are out of place. "If we work too hard to fly a complete schedule on a tough weather day, it produces a tough start up," Dolan said. Some other patterns from 2009 were repeated in the first six months of 2010. US Airways ( LCC) finished a close second during the first six months, just as it did in 2009. (US Airways was first in 2008.) American ( AMR), last among six network carriers in 2009, finished last again in the first six months of 2010. -- Written by Ted Reed in Charlotte, N.C.