United to cut costs by $2 billion, could issue dividend by 2015

Tue Nov 19, 2013 8:30am EST

Nov 19 (Reuters) - United Continental Holdings, the parent company of United Airlines, said on Tuesday its costs will fall by $2 billion every year and that it may issue dividends by 2015, as the airline cuts fuel consumption and sourcing costs and increases productivity.

At its first investor day as a joint company after United's merger with Continental, the airline said it aims to increase pre-tax earnings by two to four times the current level over the next four years and "to generate sufficient cash to begin allocating capital to shareholders by 2015."

Chicago-based United Continental Holdings has been lagging the industry on important performance points. Last month, the company missed quarterly profit estimates as the airline still struggled to consolidate itself nearly three years after a merger that created the world's biggest airline.

United has been under pressure from investors after rival Delta Air Lines said in May it plans to return $1 billion to shareholders over the next three years. The airline has been chalking out plans to improve its image among flyers, including training employees for better customer service, launching a faster boarding system and improving its food menu.

The airline also plans to increase ancillary revenue by approximately $700 million, with a goal of generating more than $3.5 billion in ancillary revenue by 2017. Ancillary revenue is revenue from non-ticket sales, like baggage fees and food sales.

United, the only American carrier to use the Boeing 787 Dreamliner, said it will use the aircraft to service new markets, but did not mention which ones. The company previously announced service from San Francisco to Chengdu, China.

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