U.S. Airlines Cut Capacity on Profit Fears
Posted on: Wednesday, 5 December 2007, 00:00 CST
Four major U.S. airlines cut their 2008 U.S. capacity plans Tuesday on growing fears high oil prices and a weak U.S. economy will significantly hurt earnings.
United Airlines Inc., Delta Air Lines Inc., Continental Airlines Inc. and Southwest Airlines Co. said rising fuel prices coupled with a forecast drop in demand threatened their financial recovery.
"We see no business case to grow domestically,'' United Airlines Inc. parent UAL Inc. Chief Financial Officer Jake Brace told a Calyon Securities (USA) Inc. airline conference in New York.
United, the world's No. 2 carrier, said it would cut capacity in its primary U.S. jet operations 3 percent to 4 percent next year. United operated under bankruptcy protection for more than three years, emerging Feb. 1, 2006.
No. 3 Delta, which emerged from bankruptcy April 25, will cut capacity as much as 5 percent, it said.
No. 4 Continental said it would slow growth to 2 percent to 3 percent from 3 percent to 4 percent.
Southwest, the largest low-cost carrier, said it would cut its capacity growth for a third time, to 4 percent to 5 percent.
Southwest said separately it would also cut the number of new airplanes it purchases in 2008 to five or 10, rather than the 34 airplanes it originally planned to buy.
Source: United Press International
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