United Airlines, the wholly owned subsidiary of United Continental Holdings Inc. (UAL), recently unveiled satellite based Wi-Fi Service on its international flights. The new services represent the first ever wireless service offered to onboard passengers on any long haul international route.
The services will be initially available on the company’s Boeing 747 aircraft and two Airbus 319 aircraft flying international passengers. By the year-end, United Airlines deploy Wi-Fi services in almost 300 aircraft. The onboard Wi-Fi platform is based on Panasonic Avionics Corporation's Ku-band satellite technology and passengers will be able to use the service through inbuilt hot spots in the aircraft.
In addition to the latest enhancement, the company also introduced a baggage delivery option. This service entails the delivery of checked bags directly to ones final destination without claiming baggage upon arrival. Initially the service will be available to passengers traveling to Boston, Chicago, Honolulu, Houston, Los Angeles and Orlando from any U.S. airport.
United Continental is making continued progress in expanding its on-board products and services in both domestic and international fleets. The company continues to improve service features and introduce products that will enhance value and profitability. United Continental has completed the installation of Economy Plus seats on 86% of the mainline fleet and will extend it to the entire fleet by January 2013.
The premium cabin flat-bed seats have been installed in 87% of the international fleet, including the first reconfigured and retrofitted International 767-300ER. The company expects to complete the installation in all international flights by the end of the first quarter of 2013. Further, United Continental started offering global satellite-based Wi-Fi in August last year, introducing the product first on Airbus A319 aircraft, followed by the Boeing 747 and 737-900ERs.
We believe the company’s efforts to enhance customer experience will lead to revenue growth and increased market traction. However, we expect these aspects to be overshadowed by the concerns over fluctuating fuel prices, rising non-fuel expense, competitive threats from other carriers like Delta Airlines (DAL), new advertising policy, unionized workforce and a sluggish global economy.
United Continental currently retains a Zacks Rank #3 (Hold) rating. For the long-term, we have a Underperform recommendation on the company.
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