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The Honolulu Advertiser
Posted on: Thursday, November 13, 2003

UAL names low-fare service

By Lynne Marek
Bloomberg News Service

United Airlines' parent announced yesterday it will name its low-fair carrier "Ted" — the last three letters of United. The airline will start flying in February.

Associated Press

United Airlines parent UAL Corp., which filed the largest airline bankruptcy last year, named its new low-fare airline unit Ted as the company prepares to take on discount competitors.

The low-fare carrier, which takes its name from the last three letters of United, will start flying in February from Denver to leisure markets including Las Vegas, Phoenix and Tampa, Fla.

Ted will use United Airbus aircraft that seat 156 passengers in one class of service, beginning with four planes and flying as many as 45 by the end of next year.

Ted is meant to help United compete with low-fare, low-cost carriers including Denver-based Frontier Airlines Inc. UAL, which is trying to cut costs through its Chapter 11 bankruptcy reorganization, said Ted will keep unit expenses lower by using planes more and having 18 more seats per plane than the same aircraft used for United.

"Branding buzz notwithstanding, from an economic perspective, it's hard to see what the fuss is about," said UBS Warburg analyst Sam Buttrick.

Chicago-based UAL's new unit is using existing United planes, with mainly the same crews, fares and markets, he said. The one new market Ted will serve from Denver is Fort Lauderdale, Fla., UAL said. The company also said the schedule and fare structure will be simpler, without providing details.

Delta Air Lines Inc. this year started Song, a low-fare unit that operates on the East Coast. The major airlines previously tried low-cost operations, with most eventually shutting down because they weren't profitable. Delta Express, United Shuttle and US Airways Group Inc.'s MetroJet all were closed after the September 2001 terrorist attacks reduced demand.

UAL announced last year that it would set up the new unit, with initial plans for a separate, lower-cost workforce. UAL executives revised those plans earlier this year after unions fought to maintain their seniority lists.

The company plans to provide more information on Ted's service on Tuesday.