Airlines rarely have it easy and the “New United,” otherwise known as United Continental Holdings (UAL), isn’t any different. United has big plans for growth, but governments from Canada to Europe seem to be trying to get in its way. Last October, for instance, Air Canada (AC.B) announced that it had created a revenue-sharing joint venture with UAL that it thought would bring increased routing options and cost savings to customers. But the country’s Competition Bureau said in late June that 10 key Canada-U.S. routes would be monopolized and competition substantially cut on nine others.
The regulator says it is challenging three cooperation agreements between the two airlines over the 19 transborder routes already in operation. This surprising response from the competition authorities has forced UAL and Air Canada to suspend plans for the venture until the Competition Tribunal rules. It is not clear what actions the bureau will take regarding the cooperation agreements.
UAL also has teamed with American Airlines (AMR) and the Air Transport Association of America to challenge the European Union’s requirement that non-EU airlines comply with emissions standards, thereby forcing them to buy carbon credits. The airlines sued the United Kingdom as they were the first to try to implement the policy, but the case was handed over to the European Court of Justice, where hearings are ongoing.
The EU argues that it has the right to implement the policy, while the United States says it goes against the Kyoto Protocol, an EU-U.S. aviation accord, and the Convention on International Civil Aviation. The EU says it will waive the requirement only if an airline’s country of origin imposes equivalent measures to cut airline pollution, which the United States has not.
On the environmental front, UAL has recently purchased more blended winglets, bringing the total up to 375, an investment which saves the company an estimated $200 million annually in fuel costs.
In its second quarter guidance, UAL announced passenger revenue per available seat mile will rise between 8.3 percent and 9.3 percent year-on-year, but that was half what analysts were expecting, forcing its stock price lower.
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