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Fri, Jul 02, 2004

United To Frequent Fliers: Don't Worry

Says Service Will Be Unaffected By ATSB Refusal On Loan Guarantees

Hustling to make sure its most valued customers don't jump ship, United Airlines this week sent out emails to its 40 million frequent fliers, promising that their service won't be affected by the government's refusal to provide $1.1 billion in loan guarantees.

"The... decision will have no effect on our service to you," said the email. "We are now moving forward to secure [bankruptcy] exit financing and emerge as a stronger, more competitive airline."

But given past performance, the email blast was hardly reassuring. The last time UAL sent out such a mass email, saying basically the same thing, was on December 5th, 2002, after the first time the Air Transport Stabilization Board turned United down for $1.8 billion in guarantees. Less than a week after that, UAL declared bankruptcy.

" They don't want their customers to worry," said Helane Becker, an analyst with Benchmark Company. "But on the other hand, they will have to make adjustments over time to their route structure. If they want to attract outside investors, they're going to have to make adjustments." Becker was quoted by the Washington Post.

Is the email working? Ask Michael Kurtz, an Oak Hill (VA) psychologist who has some 800,000 frequent flier miles.

"They're trying to make people feel better," he told the Post, "but I don't think things will get better there."

FMI: www.ual.com

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