Domestic airline downsizing continues today with United Airlines embarking on a drastic supply withdrawal that includes retiring 80 mainline aircraft and reducing capacity by 17 percent this year, and an additional 20 aircraft and 18 percent in 2009.
United plans to jettison its "oldest and least fuel-efficient jets," removing an additional 70 aircraft from its mainline fleet on top of the 30 previously announced. By the end of 2009, United will retire its 94-plane Boeing 737 fleet and six Boeing 747s. The carrier also said it would kill its carrier-within-a-carrier product, Ted, folding those 56 Airbus A320s into mainline operations and installing first class cabins on those planes beginning next year.
The carrier's reductions extend beyond aircraft. United said it expects to reduce "salaried and management employees and contractors" by up to 1,600 people, which includes 500 previously announced job cuts. "The company will determine the number of front-line employee furloughs as it finalizes the schedule over the next month," United said in a statement.
U.S. legacy carriers have been removing domestic capacity—in many cases further scaling back already—downward projections-to survive a worsening operating environment. United today announced the largest pullback yet, and like its peers, the carrier said fuel is the reason. Calling the expense a "$3 billion challenge to overcome," United claims the capacity reductions "will 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," said Glenn Tilton, United chairman, president and CEO.
American Airlines in mid-May also revised its capacity outlook, planning to further slash mainline domestic capacity by up to 12 percent in the fourth quarter this year and retire "at least 75 mainline and regional aircraft." American now expects domestic mainline capacity to drop by 6 percent for the full year, compared with 2007
(BTNonline, May 21).
Continental plans to reduce 5 percent of its domestic capacity this year, Delta is targeting capacity cuts by up to 8 percent, Northwest plans to shed 8.5 percent domestically and US Airways is targeting mainline capacity to go down by 4 percent in the second half of the year. However, all those carriers have noted to the possibility of further slashing available seats.