United Airlines parent UAL Corp. on Tuesday said it will cut its workforce by 1,100 and reduce its mainline domestic capacity by 9 percent by the end of the year as it tries to adjust to soaring fuel costs. The announcement came as the carrier reported a $537 million loss for the first quarter.
Chicago-based United’s loss was equivalent to $4.45 per share. It was more than three times the loss of $152 million, or $1.32 a share, that United reported a year earlier. United’s loss for the three months ended in March is expected to be the worst reported by a U.S. airline in the first quarter, according to Standard & Poor’s.
United’s operating revenues increased 7.7 percent to $4.7 billion in the first quarter, up from $4.4 billion a year earlier.
United pointed to high fuel costs and a weakening economy as its biggest challenges. The airline plans to take more steps to charge extra fees for certain services, such as some seat assignments.
Among the 1,100 job cuts, United plans to cut 500 salaried and management employees and 600 unionized employees through retirements, attrition and furloughs.
United also plans to reduce costs by $400 million and trim 30 aircraft from its fleet of 460 planes, a larger cut than the 15 to 20 it had announced last month.
United has its second-largest hub at Denver International Airport, with 410 daily departures from Denver.
All of United’s hubs will see reductions, according to chief revenue officer John Tague. The company did not specify how many cuts would be made in Denver.
“This was obviously a very difficult and challenging quarter for us and for the industry,” United chief executive Glenn Tilton said Tuesday.
The Association of Flight Attendants at United does not expect furloughs or job cuts to affect flight attendants currently working, said spokeswoman Sara Nelson. As United remains a focus of speculation about airline mergers, Teamsters spokeswoman Leslie Mil ler said the union is “unlikely to support any proposed merger in an atmosphere of layoffs.”
United shares plummeted 36.8 percent to $13.55 Tuesday amid concerns about the possibility of United defaulting on a bank-agreement covenant. Chief financial officer Jake Brace said United is “well above” requirements in two key covenants but that “our trajectory is downward.”
Kelly Yamanouchi: 303-954-1488 or kyamanouchi@denverpost.com
Rough flight
First-quarter financial reports haven’t been good so far for the airline industry, which is pointing to rising fuel costs. Five carriers have reported losses:
UNITED
$537 million
AMERICAN
$328 million
CONTINENTAL
$80 million
AIRTRAN
$34.8 million
JETBLUE
$8 million
Noah Berger, Associated Press file photo
