United Airlines – the wholly owned subsidiary of United Continental Holdings Inc. (UAL) –plans to add services from two of its most vibrant west coast markets on April 1, 2014. However, the news failed to excite shareholders.
United is slated to launch a couple of non-stop daily flights between the San Francisco-Atlanta and Los Angeles-Minneapolis routes. The Chicago-based carrier will use The Boeing Company’s (BA) 737-800 jets to operate between Atlanta and San-Francisco. Meanwhile, SkyWest Inc. (SKYW) owned SkyWest airlines will operate a CRJ-700 regional aircraft on behalf of united Express to provide the Los Angeles-Minneapolis service.
United will also add another flight between Seattle and San Francisco to increase the number of seats within the route by more than 50%. Additionally, the carrier will also switch to bigger aircraft for all its existing services between the routes.
This domestic expansion comes quick on the heels of the addition of several domestic routes within United Airlines’ network. Last month, the passenger carrier announced its plan to expand its services from Chicago to Elmira, Topeka and States College.
San Francisco and Los Angeles are important hubs for United, operating 300 and 200 daily flights respectively in its domestic and international market. Last month, United disclosed its plan to add daily non-stop flights between San Francisco and Indianapolis from Jan 7, 2013 using Airbus A-319. In addition, the company has recently received approval from the U.S. Department of Transportation to offer non-stop flights from San Francisco to Chengdu in China.
Rival carrier Delta Airlines Inc. (DAL) recently declared that it will launch six new non-stop flights between San Francisco and Seattle on Mar 29, 2014 and two non-stop daily flights each from Seattle to Las Vegas and Los Angeles.
We believe United launched the new route to compete with Delta to attract the California bound business and leisure travellers. Additionally, the new route will challenge Delta’s dominance in Atlanta and Minneapolis, two of the biggest hubs of the latter.
United currently carries a Zacks Rank #3 (Hold).