High-Cost Unit Will Continue to Operate

Well, it's official: United will have a low-cost affiliate carrier next year. That's what CEO Glenn Tilton (pictured) told reporters in Chicago yesterday.

Though the name of the airline hasn't been decided yet ('Avolar' is not in the mix), the initial setup is very close to what has been rumored for months: 40 airplanes will be set aside to begin the leisure-fare routes, competing primarily for the non-business dollars.

UAL continues to call the new entity (codenamed, 'Starfish') a 'low-cost' unit; a more-appropriate descriptor may be 'low-fare,' as all airlines seek to lower costs as much as possible.

The airline, which went under Chapter 11 bankruptcy protection on December 9 of last year, is currently making its promised numbers financially, according to released statements. Just when it plans to emerge from bankruptcy is still a mystery outside the airline's west suburban Schaumburg (IL) offices.

United has spent most of the year seeking concessions on its payables; and it has been especially busy with its major unions, looking at both existing liabilities (particularly on the pension front) and current contracts.

FMI: www.ual.com