Chicago based United Airlines said traffic for the month of September fell by 1.1 percent, primarily due to the declining number of passengers in North America. Additionally, United priced $659 million worth of debt, most of which will be used to pay off remaining debt from 2001.
For the month of September, paying customers flew 9.25 billion miles, down from 9.35 billion miles in Septbember 2008. The carrier reported that North American traffic fell 6.1 percent to 4.48 billion RPMs (revenue passenger miles). International traffic increases slightly by 0.4 percent to 3.61 billion RPMs. Load factor for the carrier rose 2.1 percentage points to 81.2 percent – not shocking, as fewer flights usually attributes to higher load factor.
As the first nine months of the year are complete, it’s time to measure traffic. Traffic has decreased 8.4 percent to 86.74 billion RPMs.
As for the debt offering, United is borrowing against 31 aircraft. The debt offering interest rate is 10.4 percent and will mature November 1, 2016. The carrier said they were refinancing the aircraft side of debt to reduce their debt payment obligations – taking advantage of current market conditions. The proceeds of the debt will go towards repaying the $548 million in existing debt. United said that the funds left over will likely be used for corporate purposes.
United has some work to do, but this is a step forward – financially. United needs to start looking at employee satisfaction and customer satisfaction. United Breaks Guitars, a song by Dave Carroll, drew public awareness of United’s unwillingness to compensate Carroll for damaging his beloved Taylor guitar – creating a PR nightmare for United. On the employee side, it’s not a good sign that employees are happy with you when they start create a website about the chief executive of the airline. This is fixable, but unfortunately most airlines don’t have the cash to launch massive advertising campaigns – but it might be worth it for United.
