United's next hurdle: costly repairs

[Omaha Steve]

http://www.chicagobusiness.com/cgi-bin/news.pl?id=28971&seenIt=1

By: John Pletz April 13, 2008

Rising worries about airline safety spotlight a strategic weakness at United Airlines, where an aging fleet is pushing up maintenance costs.

A series of slip-ups at United and other carriers in recent weeks triggered a crackdown by aviation regulators and sparked safety concerns among passengers. That's bad news for United, which built its post-bankruptcy financial strategy around cost-saving measures like outsourcing maintenance and keeping older planes flying longer.


Getty images/photo illustration


Upkeep on the older planes already is boosting United's outside maintenance costs at the fastest rate in the industry. Stricter enforcement of safety rules will only add to those expenses, putting more pressure on a bottom line sagging under heavy fuel costs. Safety fears, in turn, could suppress ticket sales at a time when economic weakness also threatens to dampen demand for air travel.

"Airlines like United, Northwest, Delta and American that have a lot of older airplanes have to question whether strategy that worked in 2002 is one that's viable to keep in 2008, 2009 or 2010," says Henry Harteveldt, a San Francisco-based airline analyst at Forrester Research Inc.

Regulators demonstrated their newly aggressive attitude last week when they forced American Airlines to ground 300 planes to re-inspect wiring in wheel wells. American said costs associated with the thousands of flight cancellations that stranded passengers at O'Hare International Airport and elsewhere across the country will reach the tens of millions.

FULL story at link.

[Parche]

1. Northwest Still Has Those Older DC-9/30/50's

They are the ones that need a replacement soon, as their maintenance costs are skyrocketing
:hi: