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United Airlines – the wholly owned subsidiary of United Continental Holdings Inc. (UAL - Analyst Report) – opened a new maintenance hangar at Washington Dulles International Airport, which is a major hub for the carrier to connect with the Middle Eastern market. The hangar will be operational from next month.

The new facility – being constructed at an investment of around $45 million –is capable of holding two wide-bodied or several narrow-bodied aircraft simultaneously. Wide-bodied aircraft includes The Boeing Co.’s (BA - Analyst Report) B-747, 767, 777 and 787 range and European manufacturer Airbus’s A-330, 340, 350 and 380 range. The 1,25,000 square feet hangar includes 85,000 square feet of covered aircraft space.

United provides daily non-stop service from Washington Dulles to the oil rich nations of UAE, Qatar and Kuwait, which continue to be some of the important markets for U.S. carriers. The new facility is expected to reduce the out-of-service time of an aircraft thus optimizing fleet utilization.  

The new hangar adds to United’s existing facilities at Chicago, Houston, Cleveland, Los Angeles, San Francisco. The company is building another hangar at Newark Liberty International Airport.

Recently, United chalked out plans to overhaul its finances as the airline behemoth has financially underperformed its domestic peers in recent times. The Chicago-based company plans to reduce its annual costs by $2 billion by cutting fuel cost, reducing sourcing cost, improving maintenance and optimizing distribution channels. We believe that the new hangar is part of the initiative to improve productivity of the aircraft.

Recently, US Airways Group Inc. and American Airlines Inc, a subsidiary of AMR Corp. received clearance from the Department of Justice for their proposed merger, which will create the largest global carrier. This in turn will increase competition for legacy U.S. carriers like United and Delta Airlines Inc. (DAL - Analyst Report). Building these new facilities will strengthen United’s base and make it more competitive in an important airport like Dulles.

Currently, United carries a Zacks Rank #3 (Hold).

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