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UNITED LANDS BRIGHTER IMAGE WITH SHUTTLE CHALLENGE TO SOUTHWEST WINS PRAISE FROM ANALYSTS

By Published on .

For the short haul, United Airlines is looking good.

With a new shuttle service, a smooth transition to employee ownership, low costs and favorable reviews from Wall Street, the airline is flying high.

By most counts, Shuttle by United has proven to be a surprise success since launching last October in rival Southwest Airlines' West Coast territory.

The shuttle models itself after Southwest's quick turnaround times and low costs while bringing some innovations, including assigned seating and eliminating the need to recheck baggage for connecting flights.

The shuttle started with 12,000 passengers daily and now averages 22,000 to 30,000 a day, said Tony Molinaro, a manager of media relations at United. "We're now carrying a 65% [occupancy], which is the same as December, but we have 50% more capacity," he said. For the service to break even, occupancy figures in the middle- to upper-60s are necessary, he said.

Overall, United Airlines reported a 70.3% load factor, or occupancy, the highest in its history for fourth quarter 1994.

Electronic ticketing, started with the shuttle, has spread to 190 Business One flights out of Chicago and may be implemented systemwide by July. That may make United the first carrier to offer the technology nationwide.

While analysts and consultants say they have not seen clear numbers yet on the shuttle, the airline predicts the service will be profitable in 1995; it may also expand to other regions.

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CORPORATE CLOSE-UP

Headquarters: Elk Grove Village, Ill.

Revenues: $14 billion for 1994.

Leadership: Gerald Greenwald, chairman-CEO; David Coltman, senior VP-marketing; James E. Goodwin, senior VP-North America; Alan "Sky" Magary, senior VP-Shuttle by United; Christopher Bowers, senior-VP international.

Total U.S. ad spending: $60.6 million in 1994.

Ad agency: Leo Burnett USA, Chicago.

Strengths: Shuttle by United competitive with Southwest after only six months; operating costs reduced; employee morale strong; Pacific routes may bring growth.

Challenges: Much is new and unproven; domestic margins remain thin.

Source: Advertising Age and company reports

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