United Delays Debt Payments, ATSB Asks For More Info
Creating some elbow room as it attempts to avoid a bankruptcy filing, United Airlines last week "reached an agreement in principle" with German bank Kreditanstalt für Wiederaufbau to restructure and push back $500 million in combined debt payments originally due Nov. 17 and Dec. 2. However, United still must deal with a remaining $375 million in debt obligations due to other parties on Dec. 2 and also owes mechanics $70 million in retroactive compensation. The chief executives of Lufthansa German Airlines and Singapore Airlines—both partners of United in the Star Alliance—recently suggested their airlines could aid United by possibly taking an equity stake or helping with debt payments. People familiar with United's situation confirmed such discussions are ongoing. Meanwhile, United parent UAL Corp. last week received word from the Air Transportation Stabilization Board that more details are needed as part of the airlines' second application for a federal loan guarantee. According to the board, the company must provide additional information on revenue forecasts and enhancement strategies, proposed labor cost savings and other specifics "before the ATSB can determine whether UAL qualifies for a federal loan guarantee."
Amex Details Online Costs, Benefits
Online bookings are 40 percent more profitable than offline for American Express, according to chairman and CEO Ken Chenault. "Employees at our online fulfillment centers process almost 7,000 transactions per year, versus approximately 1,400 for our offline servicing," Chenault said last week at the Forrester Research Executive Strategy Forum. "This translates into much higher financial returns, even though we earn lower fee revenue from the client for online bookings." Amex expects its 1,400 online travel accounts to generate more than 1.3 million transactions this year—about 16 percent of the total. "Since the cost of processing an online booking is less expensive for us, we are able to reduce the transaction fee the client pays us by 50 percent to 70 percent," he added. "As corporate travel volumes rebound, our objective is to add as much of it online as we can." Meanwhile, Chenault also said more than 11,000 corporate card administrators now go online to perform most of their account maintenance through the Amex@Work Web application, which handles 63 percent of all Amex corporate card maintenance transactions.
Rosenbluth Evaluates Merits Of New Web Service
Rosenbluth International has developed its prototype for Quotient, a new automated Web-based service that will evaluate technology and calculate return on investment for a variety of different technologies, including e-booking, expense management and meeting management tools. Rosenbluth will decide whether to move the project forward, with the possibility for release in the first quarter of next year.
JetBlue To Fill National Void
JetBlue Airways this Friday will launch daily nonstop flights between New York JFK and Las Vegas, originally scheduled to begin Jan. 7, following the shut down of National Airlines last Wednesday. The three-year-old struggling Las Vegas-based carrier, which had been operating in bankruptcy since December 2000, said it will not provide refunds for ticketed passengers. Affected customers should contact their credit card companies or seek reaccommodation on one of several carriers that last week announced options for those customers. "The Air Transportation Stabilization Board is choosing winners and losers in the industry, notwithstanding direction from Congress to the contrary," said National CEO Michael Conway. ATSB in August turned down National's federal loan guarantee request. JetBlue by March plans to offer four daily frequencies on the JFK-Las Vegas route.
Gateway City Hotels Hit Hardest
Starwood Hotels & Resorts Worldwide's third-quarter results bore out industry analysts' expectations that hotels in major U.S. gateway cities have under-performed the market in the current downturn. Revenue per available room fell 8 percent for the third quarter at Sheraton Hotels, Starwood's upscale brand. "The surprising drop was driven largely by the concentration of Starwood-owned Sheratons in New York, Boston and San Francisco," said Paul Keung, industry analyst for CIBC World Markets. Most startling was the 24 percent RevPAR drop at the New York Sheraton. Keung noted that 47 percent of Starwood's total room inventory, and 55 percent of its owned rooms, are in the 12 largest U.S. city-center markets. By contrast, 31 percent of Hilton Hotels Corp.'s inventory and 27 percent of Marriott International's room count is in these destinations.