CHICAGO — The head of United Airlines said Tuesday that the U.S. industry has the financial strength to weather a recession this year, helped by its reaction to spiking oil prices in 2008.
United chairman and chief executive Glenn Tilton also pointed to the positive effect of unusual industry discipline last summer on pricing and capacity.
“We, along with every other service-providing industry, are going to be affected by the downturn,” Tilton said. “Last year, our industry took steps so that it could be cash-flow positive this year with oil priced at more than $100 per barrel.”
Tilton, a former oil company executive, says estimates are reasonable for average oil prices this year to range from $60 to $80 per barrel.
United, the largest airline at Denver International Airport, parked more than 100 aircraft last year as it cut overall capacity by 4 percent, compared with 2007. Last fall, it laid out plans to cut another 8 percent to 9 percent this year, and Tilton said the company can make more adjustments if necessary.
Like U.S. rivals, United focused its cuts on the domestic market, although it has also reduced seats on weakening transpacific flights — where it is the market leader — and added service to Latin America and the Middle East.
Tilton said U.S. airlines are in a good position relative to their global competitors following the capacity cuts and their diligence in raising cash. The major carriers boosted liquidity in the second half of last year with a mix of debt and equity offerings as well as asset sales.
UAL expects to report fourth-quarter results Jan. 21, one of the first U.S. airline companies to report quarterly figures.
Tilton said that he’ll meet with the Obama administration and leaders in Congress to pursue a request for $4 billion to upgrade the air-traffic control system.
