United to Eliminate Low-Fare Airline and Cut Jobs
Posted on: Thursday, 5 June 2008, 09:00 CDT
By Micheline Maynard
United Airlines said Wednesday that it would discontinue its low- fare airline, called Ted, retire aircraft and cut as many as 1,100 more jobs, in an effort to lessen the impact of high prices for jet fuel.
The announcement had been expected for several weeks, ever since the airline surprised Wall Street with a $537 million loss in the first quarter.
The steps came a week after the airline put merger talks with US Airways on hold, and about five weeks after the board at Continental Airlines decided not to proceed with talks it was holding with United.
The actions were announced in a message from United executives to employees. United's move comes on the heels of similar cuts at a series of other airlines, which are struggling to combat an 82.5 percent increase in the price of jet fuel compared with last year.
United said flights by its Ted unit would end, although it did not give a date when that would happen. It said the Airbus A320 aircraft used to carry passengers on Ted would be incorporated back into its main fleet.
United, whose parent is UAL, said it would retire 100 aircraft, including all 94 of its Boeing 737 medium-range jets, assuming the airline could reach agreements with aircraft lease companies.
The number includes 30 craft whose retirement had already been announced. In addition, United said it was retiring six Boeing 747- 400 series jets that were used on long flights, like those overseas and to Hawaii.
The steps will reduce the age of United's fleet to 11.8 years from 13 years, and reduce its overall capacity by 17 percent through 2009. United said 80 planes would leave its fleet by the end of this year, while the remaining 20 would be retired in 2009.
In addition, United said it expected to cut up to 1,600 jobs, including 500 that had already been announced.
The United chief executive, Glenn Tilton, told employees that the company's measures were intended to "enable us to compete more effectively - and ultimately more profitably - in this environment."
United started Ted in February 2004 in an effort to compete against low-fare airlines that had invaded its turf. Ted, and Song, a now-defunct unit of Delta Air Lines, were started by their parent companies in response to market share gains by JetBlue, Frontier, AirTran and other low-fare carriers.
Ted, with one class of service, flew to 20 destinations throughout the United States and Mexico, and had its main base in Denver. Ted's Airbus jets were among the youngest in United's fleet.
The low-fare unit was announced as one of the major steps taken by United while it was operating under Chapter 11 bankruptcy protection.
Originally published by The New York Times Media Group.
(c) 2008 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.
Source: International Herald Tribune
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