No More 737s; Ted Dead, Too
Managers at United Airlines are advised to look out for
machete-wielding "efficiency experts" roaming the halls in Chicago.
On Wednesday, the world's second-largest airline announced it plans
to slash as many as 1,100 salaried jobs in the coming months, as
the airline continues to falter under the burden of high fuel
United also announced it will ground an addition 70 aircraft, on
top of 30 planes already taken out of service. And "Ted," United's
one-time (and, arguably, ill-conceived) attempt to capture a share
of the low-cost market, will soon be euthanized, as well.
It's the second time in as many months United announced plans to
cut back its operations, reports Bloomberg, and comes days after
merger talks between the airline and US Airways officially came to
an unresolved end.
At that time, United
CEO Glenn Tilton said the airline would continue on as an
independent carrier... and this is how they plan to do it, in the
face of a projected $3 billion increase to its 2008 fuel bill.
"These are very aggressive domestic capacity and cost cuts,"
said Calyon Securities analyst Ray Neidl. "If oil stays at $130 or
$120 a barrel, I expect you'll see additional big cuts."
United plans to park its entire fleet of Boeing 737-300 and -500
aircraft, as well as six of its aging 747-400 long-haul widebodies
-- a full 15 percent of its current mainline fleet. Although United
aims to cut domestic capacity, some short-haul capacity will be
recouped by Airbus A320 Family planes coming off service with
Ted... which in recent years was operated as part of the mainline
"The older 737s that United will retire consume up to 20 percent
more fuel per seat on a typical domestic flight than the more
modern A319s and A320s that the company operates," said Douglas
Runte, managing director at RBS Greenwich Capital in Greenwich,
United announced in April it planned to slash 500 management
jobs. The latest workforce reduction will also involve only
salaried positions, further reducing United's top-heavy management
structure... though the carrier plans to cut union payrolls, as
well, down the line.
With the grounding of six fuel-thirsty 747s, United even plans
to cut back its profitable international operations... yet another
sign fuel prices are taking a profound toll on the carrier's bottom
"While these are difficult decisions that will impact many of
our employees, they nevertheless must be made if we are to assure
United's long-term viability," Chief Operating Officer John Tague
said in a message to employees.