United Airlines emerged from its three- year bankruptcy Wednesday, a move that portends greater stability for its network and in key hub cities such as Denver.
Officials in Denver, where United has its second-biggest hub, expressed relief that the Chicago-based airline has exited Chapter 11.
“It certainly takes away a lot of the risk that DIA really has been faced with,” Denver Mayor John Hickenlooper said. “It’s nothing but good news.”
Evergreen aviation consultant Mike Boyd called United’s emergence from bankruptcy “100 percent positive” for the near term.
“United is a critically important part of the community,” he said. “They’re as important to Denver as General Motors is to Detroit.”
United remains the largest carrier at Denver International Airport but with a smaller piece of the market. Since declaring bankruptcy in 2002, United has seen its share of domestic flights at DIA fall from 63.4 percent to 55.3 percent, with Frontier Airlines capturing a sizable portion of those fliers.
United’s troubles also opened the door for discount carrier Southwest Airlines to begin flying in and out of Denver in January.
In return for Denver’s forgiving $184 million in debt tied to a failed automated baggage system at DIA, United has pledged to boost the number of connecting passengers it moves through the airport.
The deal calls for United to increase its number of connecting passengers from 7.5 million to 7.7 million travelers by 2008, the same number as United moved through DIA in 2004.
Emergence from bankruptcy provides United the opportunity to begin growing again in Denver.
“We’ve got our eye on growing Denver,” said John Tague, United’s executive vice president of marketing, sales and revenue.
Turner West, DIA’s co-manager of aviation, said with United out of bankruptcy, the airport can resume its planning for growth.
“This means we will be reviewing the airport as a system – including highways, parking, the train, terminal, concourses and other facilities – and deciding how we can grow wisely and efficiently to meet the expected increase in passenger demand in the coming years,” he said.
Tom Clark, executive vice president of the Metro Denver Economic Development Corp., called United an “integral part of our long-term strategy” to be a center of transportation.
United remains a major employer in Colorado with 5,311 workers. But that’s down from 7,700 in 2002.
For passengers, United’s coming out of bankruptcy means few real differences.
“I’ve flown bankrupt airlines before, and it really hasn’t made much of a difference,” traveler Andrew Hildebrant of Fort Collins said at DIA on Wednesday. “I’m hoping that they’re well-positioned as an airline – that they don’t have trouble moving bags, for instance.”
During bankruptcy, United created Ted, a discount operation with sizable operations in Denver. United expanded Ted by 20 percent in 2005 and plans some growth this year.
United also replaced larger airliners with smaller regional jets on many flights. To compensate, United added bigger regional jets to some routes and branded the service “explus.”
United has made other small service changes, following a broader trend in the airline industry of wringing out cost savings. It has:
Cut back on in-flight meals and begun charging for food on board.
Started charging $2 per bag for curbside check-in.
Begun charging a service fee for airline tickets booked at reservations centers or airport ticket counters in the United States.
Pushed customers toward Internet bookings and self-service kiosks at the airport to cut back on labor costs.
Changed the way it boards planes – starting with window, then middle, then aisle seats – and also will try a dual-end boarding gate on Ted that will board passengers from the front and the back of the plane at the same time.
“We definitely give them kudos for the work they’ve done to reduce their costs, and we know they’re a leaner, meaner competitor than when they went into bankruptcy,” said Frontier spokesman Joe Hodas. “We’ll definitely keep a watchful eye and see with the rest of the industry how they fare out of bankruptcy.”
Local United labor-union leaders welcomed the exit from bankruptcy but were cautious about the future.
“We’re grateful that the company is coming out of bankruptcy, but we’re worried,” said Jody Weant, president of the United Association of Flight Attendants’ council in Denver.
High fuel costs create “a concern that they’re even going to succeed,” Weant said.
Aircraft Mechanics Fraternal Association Denver-area chapter president Bill Moons said there is “a sense of relief,” but that “we are bitterly disappointed that the stint in bankruptcy did not provide a new management culture at Untied Airlines.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
Q&A
Some frequently asked questions about United:
Q: Will there be any changes to United’s frequent-flier program, Mileage Plus?
A: United expects no changes to mileage programs or other customer programs.
Q: Will Denver still be a hub for United?
A: United said it expects no changes to its hub structure and expects Denver to be a United hub for a long time.
Q: How has United changed services for customers while in bankruptcy?
A: It has closed reservations centers and is encouraging more Internet bookings. It started Ted, a discount operation with no first-class seats. It has changed the way it boards planes, boarding first those in window seats, then middle seats, then aisle seats. United this month changed its check-in cutoff time to 30 minutes before a flight, instead of 20 minutes.
Q: What costs more when you fly United?
A: Customers are charged for “snack boxes” onboard planes, for curbside check-in at DIA and other airports and for buying tickets by phone or at the airport.
