Friendly skies over L.A.: United's cuts already made, no major hit seen at LAX.

Los Angeles International Airport should emerge relatively unscathed from looming cutbacks at United Airlines, with only a limited number of short-haul flights likely to be cut, say industry analysts.

So far, there have been no changes as a result of parent UAL Corp.'s bankruptcy filing last week. But United has begun meeting with unions to discuss possible layoffs and will be conducting "stress tests" to determine what flights are cost-prohibitive going forward, said Chris Brathwaite, a spokesman for the airline.

"LAX is less vulnerable because it's not a bloated hub operation with far too many seats than the market can justify," said Joe Schwieterman, director of DePaul University's Chaddick Institute for Metropolitan Development, which specializes in transportation issues.

Los Angeles serves more as a gateway to the Pacific than as a traditional hub, directing passengers to mainland destinations. Long-haul flights, especially overseas, bring in the most revenue and are unlikely to be cut.

"The long-haul routes tend to be fairly profitable," said John Hansman, director of the International Center for Air Transportation at MIT. "You expect to pay a fair amount of money to fly to Tokyo. You don't expect to spend a lot of money to go to Las Vegas."

Domestic transcontinental flights also generate high revenues, making them less likely to be cut. United has eight daily flights to New York and eight to Washington D.C. out of LAX.

Of United's 113 daily departures from LAX, 105 are domestic, and 35 could be considered short-haul. The airline runs 17 flights a day out of L.A. to San Francisco, 12 to Denver and six to Seattle.

Where cuts could be felt more are at Ontario International Airport and Burbank-Glendale-Pasadena Airport. From Burbank, United flies to San Francisco seven times a day and twice to Denver, said Victor Gill, an airport spokesman.

At Ontario, United has four daily departures to Denver, according to Los Angeles World Airports, which operates Ontario Airport and LAX.

These short-hauls are more expensive to operate because they carry the same number of pilots with fewer full-fare passengers than long-haul flights. "Short-haul flights are particularly vulnerable due to the enormous competitive disadvantage United has with its low-cost competition," Schwieterman said.

Major role

In L.A., United employs 6,500 in the county's three major airports--including 3,000 flight attendants and 1,015 pilots based here. Ticket and reservation agents, ramp workers, baggage handlers and mechanics account for 2,200 jobs at LAX and about 100 combined at Ontario and Burbank, said Joseph Tiberi, spokesman for the International Association of Mechanics.

United also has a significant investment in LAX's infrastructure.

The airline put $260 million into facilities there between 1994 and 2001, including a federal inspection facility, airline club, state-of-the-art baggage claim system and construction of a 182,000-square-foot cargo facility completed in 2001. "We have made a commitment to L.A. and will be a major player in L.A.," Brathwaite said.

But United had made significant flight cuts at LAX before the Chapter 11 filing.

Prior to the 2001 terrorist attacks, United had 174 daily departures. That was reduced by 40 percent, to 104, after Sept. 11, according to LAWA, although some flights have since been reinstated.

"In the last year or so they have analyzed their flights one at a time and tried to determine what they need to do to cut costs," said Aaron Gellman, a professor at Northwestern University's Transportation Center. "In large measure, they instituted those changes. In L.A., there is little to be done."

To the extent there are further reductions, the most vulnerable would be flights of 5001,000 miles that could be cut back or eliminated altogether. Even there, however, United may be cushioned.

The airline has been shifting a greater number of short-haul flights to United Express, a service operated by three regional carriers with which it has marketing agreements. United does not own, lease or staff the United Express airplanes, which are operated by Air Wisconsin Airlines Corp., Atlantic Coast Airlines Holdings Inc. and Sky West Inc.

United Express took over an increasing number of flights--now 159 at LAX--after United cancelled its own West Coast short-haul service, called United Shuttle, in October 2001.

SkyWest operates 65 percent of the United Express flights out of LAX, according to Mike Kraupp, vice president of finance and assistant treasurer of the St. George, Utah-based carrier. It serves Fresno, Oakland, San Jose, Sacramento, Tucson and Phoenix, Ariz., and Colorado Springs, Colo.

Kraupp said he expects to pick up more United Airlines flights because of the bankruptcy.

"If they're not filling the aircraft, we become a viable alternative," Kraupp said. "And if you look at their average load factors, they don't fill the flights. Now that United is forced into bankruptcy, I'm sure it'll take a look at those markets and determine if it's economical to fly them."

In Burbank and Ontario, however, all the short-haul flights are operated by United Airlines itself.

Gill, who said he wasn't concerned about flight cuts, noted that United has been at Burbank since 1986 and considers San Francisco a core route. Also, following Sept. 11, United opted to decrease the frequency of flights at Burbank rather than cut flights altogether.

Employment concerns raised

Spokespeople for the flight attendants, pilots and mechanics' unions declined to discuss the implications of United's bankruptcy on employment.

But if United shifts its fleet, as is expected to some degree, it would impact all employees. To minimize costs, for example, United might eliminate some older planes needing maintenance, which could reduce the number of mechanics needed, said William Rochelle, bankruptcy attorney at Fulbright & Jaworski LLP.

Additionally, United may replace larger planes with smaller ones that are more likely to carry a full load of passengers paying regular fares, Hansman said. Shifting to smaller and more efficient planes, such as the Boeing 777 and 737, could reduce the number of pilots and flight attendants needed.

It could also impact cargo operations, said Michael Boyd, an airline analyst at Boyd Group in Evergreen, Cob. "Instead of a 747, that's a big airplane, they may go to a 150-seat A320, which has less ability to carry cargo," he said.

United shipped 20 percent of all air mail out of LAX in 2001, according to LAWA, more than any other airline. It also flew more air freight than any other airline other than FedEx.

Flights also could be cut, impacting all employees, if United opts to reduce its terminal space at LAX. United occupies terminals 6, 7 and 8 at LAX, including United Express flights.

"Gates at LAX will be available if there's some other startup airline or another airline that is willing to pay a lot for those gates," Hansman said. "United may decide its cash situation is so desperate, it'll give up future revenues because it needs cash."

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Dominant Position

United is among the leaders in all LAX categories. *

                             Market
Category                     Share   Rank

Arrivals--6,368,042          20.5%   1st
Air Freight (tons)--121,077   6.8%   2nd
Departures--6,333,432        20.7%   1st
Air Mail (tons)--35,650      20.1%   1st

* Based on 2001 data

Source: Los Angeles World Airports