United Airlines to slash fleet, jobs as fuel prices soar

WASHINGTON (AFP) — United Airlines, the second-largest US carrier, said Wednesday it was cutting its fleet, operations and up to 1,100 additional jobs to compete amid soaring fuel prices and a weakening domestic economy.

United said it would trim US capacity by 17-18 percent through 2009 and remove 100 aircraft from its fleet, including 30 Boeing 737s that were previously announced.

United, a unit of UAL Corporation, is the latest major US airline to announce a downsizing in the face of skyrocketing oil prices that have the industry reeling. The leading carrier American Airlines took similar action to stem losses from the crisis two weeks ago.

The International Air Transport Association on Monday forecast its 230 member airlines faced losses of 2.3 billion dollars this year due to record fuel costs that have more than doubled in the past year.

United said current fuel prices created a "challenge" of more than three billion dollars, and that the measures would offset that challenge by 2009, assuming the industry as a whole takes similar actions.

"This environment demands that we and the industry act decisively and responsibly. At United, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment," said Glenn Tilton, United's chairman, president and chief executive.

The Chicago-based airline said it expects to reduce the number of salaried and management employees and contractors by 1,400 to 1,600 by the end of the year. The work force reduction includes a previously announced reduction of 500 employees.

As part of these changes, United is eliminating its low-cost domestic carrier Ted, reconfiguring that fleet's 56 Airbus 320s by year-end 2009.

Of the 100 aircraft slated for removal, United wants to retire all 94 of its Boeing 737s, as well as six Boeing 747s. The company said the retirement of the 737s is dependent on reaching a deal with its leasing firms.

The fleet reduction is expected to retire United's oldest and least fuel-efficient jets, and will lower the company's average fleet age to 11.8 years, the airline said.

The reduction represents roughly 20 percent of United's operating fleet of 460 aircraft, with an average age of 13 years, at the end of 2007.

The company said fourth-quarter domestic capacity would be reduced by 14 percent from the same period in 2007.

International operations would be streamlined less dramatically. United said it would lower international capacity by up to 4.5 percent in the fourth quarter, and by 5.0 percent in full-year 2009, compared with 2007 capacity.

United Airlines currently operates more than 3,200 flights a day to more than 200 domestic and international destinations and is a founding member of the Star Alliance.

Investors applauded the announcement, lifting UAL shares 7.2 percent to close at 9.14 dollars. The stock has lost three-quarters of its value since the start of 2008.

UAL reported on April 22 a pre-tax loss of 542 million dollars for the first quarter, 305 million dollars higher than the first quarter of 2007, driven primarily by a 618 million dollar increase in fuel expenses.

The struggling airline's downsizing comes amid strenuous cost-cutting and consolidation as airlines grapple with record fuel prices, a global credit squeeze and a slowing US economy.

AMR Corporation, the parent of the largest US carrier, American Airlines, announced on May 21 it would cut domestic flight capacity by up to 12 percent during the fourth quarter and retire at least 75 aircraft.

And in mid-April Delta Air Lines and Northwest Airlines announced a merger agreement that would create the world's biggest airline