United Airlines will offer its own version of a no-frills, basic
economy fare beginning in the second half of 2016, the carrier said during
its fourth-quarter earnings call on Thursday.
“It will allow us to compete with ultra-low-cost carriers more
effectively, which means more fare product for customers that are looking for
price point,” CFO Jim Compton said.
United executives had previously hinted that such a step was
coming, but had not been explicit. The new fare class comes as ultra-low-cost
carriers Spirit, Frontier and Allegiant are expanding operations. It will
follow Delta’s 2012 rollout of Basic Economy. American has also announced that
it will launch a low-cost fare class this year.
United has yet to provide information on what its basic economy
tickets will entail. Typically, such fares do not offer reserved seats
and have stricter provisions on cancellations and changes than standard economy
seats.
United reported fourth-quarter net income of $823 million, up from
$28 million a year earlier. It was a Q4 record for the airline.
For the year, United reported $4.2 billion in pre-tax
income, its highest ever. Accounting for tax benefits the airline claimed from
previous losses, net income came to $7.3 billion, up from $1.1 billion in 2014.
United’s net income in Q4 was bolstered by a 36%, or $922
million, savings in fuel costs compared to a year earlier. Revenue, hurt by the
declining dollar and a 7.2% decrease in per-mile ticket prices, dipped 3%, to
$9.03 billion.
United's stock was up 13 cents, to $45.25, shortly before
12 p.m. Eastern time.
The airline’s fourth-quarter earnings per share of $2.54
missed analyst expectations by 4 cents. Revenue for the fourth quarter missed
the analysts’ projection by $40 million.
The United earnings conference Thursday marked the public
return of CEO Oscar Munoz, who is recovering from a heart transplant he
received earlier this month. Speaking with a strong voice, Munoz said he will
be back to work full time by the end of March.