United Airlines is to become the latest US airline to slash flights and jobs as the soaring price of oil takes a heavy toll on the industry. The airline, America's second largest, announced yesterday that it plans to reduce domestic capacity by 17-18% in 2009, and will cut 100 planes from its 460-strong fleet by the end of the next year in order to do so.
Chief operating officer John Tague announced that 70 planes would be moth-balled, in addition to the 30 or so which had already been announced. The planes will be 94 of its single-aisle Boeing 737s, its least fuel-efficient planes used for domestic flights, and six Boeing 747 jumbos used for international flights.
In addition, the airline will cut up to 2100 staff from its 55,000-strong workforce, which includes 500 redundancies already announced and an additional 1400-1600 job losses among salaried and management-level workers. The airline is also ditching its ¡®Ted¡¯ division which served the US domestic leisure market.
Mr Tague said the move was a ¡®significant step¡¯ that would lead to ¡®a more effective and efficient operating fleet¡¯ for the airline in the coming years. Glenn Tilton, United chief executive, added: ¡®This environment demands that we and the industry act decisively and responsibly. We continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment.¡¯
The cuts come a week after United backed out of merger talks with US Airways. Two weeks ago American Airlines said it would cut domestic capacity by 11-12% in the current year, as it became the first mainstream US airline to introduce a charge for passengers checking bags into a plane's hold.
Analysts have predicted it will take a 20% reduction in capacity - and a 20% increase in fares - before the US airline industry reaches financial stability. Whether the airlines can achieve this, only time will tell. |
