United Continental sales show no recession signs

CHICAGO Wed Oct 12, 2011 12:57pm EDT

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CHICAGO (Reuters) - United Continental Holdings (UAL.N) is not seeing signs of an imminent recession in its travel bookings even as the United States and other major economies grapple with a troubling economic outlook, the airline's chief executive said on Wednesday.

"We're not seeing it in our bookings. We're not seeing it in our business travel at this point. But certainly it could happen," Jeff Smisek told reporters at an event hosted by the Executives' Club of Chicago.

The airline industry is bracing for another round of economic weakness that experts say threatens to drain travel demand. The top carriers are better positioned for shocks now than they were several years ago because of downsizing and consolidation that trimmed excess capacity.

Some airlines like AMR Corp's AMR.N American Airlines and Delta Air Lines (DAL.N) have already said they would trim capacity in the fall. Smisek said United Continental is prepared to be "nimble" and "responsive" to weaker demand.

"If we have demand drop off because of economic developments, we will take capacity out," he said.

United Continental is the parent of United Airlines, the world's largest airline, which was formed last year from the merger of UAL Corp and Continental Airlines. The two companies continue to operate separately while they integrate.

During his prepared remarks, Smisek said the airline expects to take delivery of its first Boeing Co (BA.N) 787 Dreamliner in the second half of 2012.

United Continental will be the first North American carrier to fly the light-weight, carbon-composite widebody, which is three years behind its original schedule because of snags in its extensive global supply chain.

The first Dreamliner was delivered last month to its launch customer All Nippon Airways (9202.T). Boeing now faces the daunting task of getting its 787 production rate up in time to meet commitments to its customers.

United Continental has ordered 50 Dreamliners. Boeing has taken orders for 821 of the planes.

Smisek also said United Continental, which expects to take delivery of 19 Boeing 737 narrowbodies next year, is looking to expand its order to replenish its fleet with newer planes. Smisek said the carrier is considering updated narrowbody offerings from Boeing and its rival Airbus EADS EAD.PA.

Boeing has said it would upgrade its best-selling 737 with a new fuel-efficient engine and call the plane the 737 MAX. The MAX will compete with a re-engined Airbus widebody known as the A320neo.

"We're looking at both airplanes as we should be. The neo is a very attractive airplane as I believe the MAX will be," Smisek said.

Sources have told Reuters that UAL is mulling an order that could total 200 planes. Talks are in early stages and an order could be several months off.

Shares of United Continental were up 2.6 percent at $20.30 on the New York Stock Exchange.

(Reporting by Kyle Peterson in Chicago; Editing by Derek Caney, Phil Berlowitz)

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