United Airlines parent UAL Corp. today said it will cut its workforce by 1,100 and reduce its mainline domestic flight capacity by 9 percent by the end of the year as it tries to adjust to skyrocketing fuel costs. The announcement came as the carrier reported a $537 million loss for the first quarter of the year.
Chicago-based United’s loss was equivalent to $4.45 per share. It was more than three times the size the loss of $152 million, or $1.32 a share, that United reported a year earlier. United’s loss for the three months ended March 2008 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 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 cut costs by $400 million and cut 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.
“This was obviously a very difficult and challenging quarter for us and for the industry,” said United chief executive Glenn Tilton today.
The Association of Flight Attendants at United does not expect furloughs or job cuts to affect flight attendants currently working, according to spokeswoman Sara Nelson. As United remains a focus of speculation about airline mergers, Teamsters spokeswoman Leslie Miller said the union is “unlikely to support any proposed merger in an atmosphere of layoffs.”
United shares plummeted 36.8 percent today to $13.55, 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 “our trajectory is downward.”
Kelly Yamanouchi: 303-954-1488 or kyamanouchi@denverpost.com
