United’s Cleveland cuts and other moves benefit bottom line: Analyst

Washington DC
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United Airlines will see revenue benefits from its cuts at Cleveland Hopkins International airport and the redeployment of its Boeing 747-400 fleet, writes Evercore analyst Duane Pfennigwerth.

The Chicago-based carrier will be able to remove about 20 50-seat regional jets from its feeder fleet as a result of pulling down its hub in Cleveland, he writes in a report following meetings with United chief financial officer John Rainey and other senior executives.

This reduction will have a “material” impact on the carrier’s finances, he says.

United will reduce its Cleveland departures by 64% and its available seat miles (ASMs) by 36% by June. It announced the reductions on 1 February.

Airline executives do not foresee pulling down any additional hubs, says Pfennigwerth.

United’s redeployment of some of its 747 fleet to certain routes out of Chicago O’Hare International airport will improve profitability by about $40 million annually, the executives tell him.

The carrier will deploy the aircraft on flights between Chicago and Frankfurt, Shanghai Pudong and Tokyo Narita, beginning in March. They were concentrated at its San Francisco International airport hub to improve operational reliability in 2013.