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United Announces Capacity CutbacksJune 5, 2008 By: George Dooley
United Airlines announced a 17 percent cut in domestic capacity, the elimination of low-cost Ted and the reduction of its fleet by 100 aircraft. The move will enable the company to withstand record oil prices and a softening economy, the airline said. The carrier also expects to reduce staff by 1,400-1,600, including a previously announced 500-employee reduction by year-end.
“Today we are taking additional, aggressive steps that demonstrate our commitment to size our business appropriately to reflect the current market reality, leverage capacity discipline to pass commodity costs on to customers, develop new revenue streams and continue to reduce non-fuel costs and capital expenditures,” said Glenn Tilton, United’s chairman, president and CEO.
“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.” United said with fuel at current prices it faces a $3 billion shortfall.
United said it will remove a total of 100 aircraft from its mainline fleet, including the 30 previously announced Boeing 737s, and reduce its mainline domestic capacity in the fourth quarter 2008 by 14 percent year over year. As part of these changes, United is eliminating its Ted product, reconfiguring the Ted fleet of 56 A320s to include United First class seats. The reconfiguration of the Ted aircraft will begin in spring 2009 and be completed by year-end 2009.
Under pressure from soaring oil costs American and Delta have also announced cutbacks. Visit www.ual.com.