UAL loses money, but supports Aloha?
05-04-2007, 04:15 AM
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UAL loses money, but supports Aloha?
United Airlines is buying a minority stake in its codeshare partner, Aloha Airlines, and United said the investment "could expand over time."
The announcement Thursday by Chicago-based United, which only recently regained some of its financial footing after more than three years in bankruptcy, has the potential to once again change the dynamics of the turbulent interisland airline market.
The past several years have seen both of Hawaii's primary carriers -- Aloha and Hawaiian Airlines -- enter and exit bankruptcy and both are contending with the arrival of cut-rate competitor go! airlines last year. Presumably, the United investment gives Aloha more breathing room to cover rising fuel costs and the $39 interisland fare wars.
United (Nasdaq: UAUA - News) did not say how much it was investing in privately-held Aloha. United said it will receive a seat on Aloha's board of directors. The statement issued by United said the agreement with Aloha "expands marketing, operational and financial opportunities for both carriers" and that the financial stake "could expand over time."
Aloha told its employees about the United partnership earlier on Thursday and made the official announcement Thursday afternoon.
United made the announcement after U.S. markets closed. Its stock closed at $33.55, down 21 cents.
"The beauty of this for Aloha is that we will benefit from the financial and worldwide marketing strength of one of the world's largest airlines," said David A. Banmiller, Aloha's president and chief executive officer said in a statement released by United. "Both airlines have a proven record of providing quality air transportation to Hawaii's residents and visitors, who will reap the benefits as we work closely with United to market Hawaii's popularity as a global tourism destination and its links to Asia and the Pacific."
United Airlines offers more service to Hawaii than any other Mainland airline. United has been flying to Hawaii since 1947.
The two airlines have been codeshare partners since the early 1990s, enabling passengers to book connecting flights and earn and redeem frequent flyer points on both airlines.
UAL reported a net loss of $152 million in the first quarter of 2007, an improvement over the previous year when the carrier was just exiting nearly four years under Chapter 11 bankruptcy.
But the loss signaled sluggishness in the domestic market and United said it might cut some flights.
United reported positive cash flow of $626 million in the first quarter, enabling it to pay off $1.4 billion in debt. But the company still has debts of $12.5 billion on its books.
Aloha filed for bankruptcy in December 2004 and exited in February 2006 by cutting about $75 million in labor and operational costs and obtaining $100 million in financing from local and Mainland investors.
The announcement Thursday by Chicago-based United, which only recently regained some of its financial footing after more than three years in bankruptcy, has the potential to once again change the dynamics of the turbulent interisland airline market.
The past several years have seen both of Hawaii's primary carriers -- Aloha and Hawaiian Airlines -- enter and exit bankruptcy and both are contending with the arrival of cut-rate competitor go! airlines last year. Presumably, the United investment gives Aloha more breathing room to cover rising fuel costs and the $39 interisland fare wars.
United (Nasdaq: UAUA - News) did not say how much it was investing in privately-held Aloha. United said it will receive a seat on Aloha's board of directors. The statement issued by United said the agreement with Aloha "expands marketing, operational and financial opportunities for both carriers" and that the financial stake "could expand over time."
Aloha told its employees about the United partnership earlier on Thursday and made the official announcement Thursday afternoon.
United made the announcement after U.S. markets closed. Its stock closed at $33.55, down 21 cents.
"The beauty of this for Aloha is that we will benefit from the financial and worldwide marketing strength of one of the world's largest airlines," said David A. Banmiller, Aloha's president and chief executive officer said in a statement released by United. "Both airlines have a proven record of providing quality air transportation to Hawaii's residents and visitors, who will reap the benefits as we work closely with United to market Hawaii's popularity as a global tourism destination and its links to Asia and the Pacific."
United Airlines offers more service to Hawaii than any other Mainland airline. United has been flying to Hawaii since 1947.
The two airlines have been codeshare partners since the early 1990s, enabling passengers to book connecting flights and earn and redeem frequent flyer points on both airlines.
UAL reported a net loss of $152 million in the first quarter of 2007, an improvement over the previous year when the carrier was just exiting nearly four years under Chapter 11 bankruptcy.
But the loss signaled sluggishness in the domestic market and United said it might cut some flights.
United reported positive cash flow of $626 million in the first quarter, enabling it to pay off $1.4 billion in debt. But the company still has debts of $12.5 billion on its books.
Aloha filed for bankruptcy in December 2004 and exited in February 2006 by cutting about $75 million in labor and operational costs and obtaining $100 million in financing from local and Mainland investors.
05-04-2007, 10:58 AM
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05-04-2007, 11:05 AM
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