United to continue expanding internationally

United Airlines intends to expand about 15 percent internationally over the next three years but has no interest in increasing its domestic operations, a senior executive of the carrier said today.

Jake Brace, chief financial officer of United and parent UAL Corp., told investors and analysts the No. 2 U.S. airline remains strongly interested in combining with another carrier. But he declined to comment on any specific efforts beyond ongoing exploratory work by its lawyers and investment bankers into potential deals.

"We are not standing around waiting for consolidation to happen," Brace told an investor conference in New York. "We're interested in that. But we're focused on our business plan."

Talk that a deal needs to happen soon or risk facing less receptive regulators in Washington under a new administration is just "idle speculation," he said. "Nobody really knows."

The company's business plan calls in part for shedding units, and Brace said the company has held talks with numerous potential buyers of its maintenance, repair and overhaul operations and expects to receive multiple bids soon.

The maintenance unit employs about 5,500 mechanics and handles much of the airline's routine repair work as well as maintenance for about 150 other carriers.

United also is starting discussions with its unions on that prospective deal, he said, since "they have the ability to block something like this."

Efforts to sell the frequent-flier program are "not quite as far along," he said.

United already had said it is pulling back domestically, with plans to shrink capacity by 3 percent to 4 percent next year in a U.S. market it considers overcrowded and lacking the money-making potential of overseas routes.

Brace said the airline can carry out its next round of international expansion by reconfiguring or shifting airplanes from its domestic operations. "Beyond that 15 percent, at some point we may want to order a handful of international planes," he said.

By not adding new planes to its fleet, analysts have said it is clear United is banking on a merger at some point. Brace's remarks did nothing to dissuade them.

"We believe that the industry is going to be a lot different five years from now, and we believe that we're well positioned to thrive in that industry," he said. "Our ambition in five years is to be the leading U.S. airline."

United shares rose 2 cents to $39.83 in afternoon trading. They are down about 9 percent in 2007.