United Airlines to slash capacity by 14 per cent, cut up to 1,600 jobs

UAL Corporation, the parent of United Airlines, plans to slash domestic capacity by 14 per cent or around 100 aircraft in all and reduce its labour force by a total of around 1,400 to 1,600 by the fourth quarter of this year.

UAL Corp, the second largest airline in the US, will also reduce its mainline fleet of 460 by at least 70 by the end of 2009, with possible further job cuts, the Wall Street Journal reported.

Over the 2008-09 period, UAL will reduce its mainline domestic capacity between 17 per cent and 18 per cent, and total capacity between 9 per cent and 10 per cent.

"With fuel at historically high levels, United and our competitors need to redefine ourselves in this marketplace. The answers are not easy, yet this environment demands that we and the industry act decisively and responsibly," UAL chief executive Glenn Tilton said in a message to employees.

UAL expects to retire all of its 94 single-aisle Boeing 737s under a deal with lessors. UAL also will retire six Boeing 747 jumbos.

AMR Corporation's American Airlines had last month said it would cut its domestic capacity by 11 to 12 per cent in the fourth quarter and cut more than a thousand jobs.

In March, Delta Air Lines, which plans to merge with Northwest Airlines, said it would cut 2,000 jobs through voluntary retirement and reduce its 2008 domestic capacity by 10 per cent year over year.

Airline experts generally agree that the industry must cut its capacity by 20 per cent and raise fares by 20 per cent to become stable.

United, which has been battered along with the rest of the industry by soaring fuel prices, lost $537 million in the first quarter. It has also sought a  merger with rivals in an effort to offset its fuel bill. UAL and rival US Airways Group ended merger talks last month.

The cuts may also lead to a large yet-to-be-determined number of layoffs of its unionised work force and a major reduction in routes or daily flight frequencies, the airline said.