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More jobs are being cut at United Airlines

July 22, 2008 3:47:15 PM PDT
The Chicago-based air carrier says it will now eliminate a total of 7,000 employees by the end of 2009. The airline says the high cost of fuel is the main reason for the new round of cuts.

The news comes as United posts a loss of more than $2.5 billion in its second quarter.

Had there not been this explosion in fuel prices, United would have shown a profit, but the reality is that United and the other carriers this year will collectively pay $20 billion more for fuel than they planned and that adds up to layoffs.

Earlier this summer United announced that it would be laying off roughly 1500 salaried employees and over 900 pilots. But now those numbers are going up dramatically.

Through 2009, United now says it will lay off a total of 7,000 employees. In addition to the pilots and salaried workers, the airline will also cut mechanics, baggage handlers, reservations clerks and customer service representatives.

United, and other airlines, are shrinking to survive.

"They feel battered. Load factors up, consumers are complaining, security lines lead to crowded situations at the airport. All this adds up to a situation where the quality of air service is taking it on the chin," said Joe Schwieterman, DePaul University Airline Analyst.

Because of the concentration of United employees in Chicago, the layoffs will be more pronounced here than in other cities served by the airline.

United is but one snapshot of what's happening in commercial aviation - at least among the legacy carriers. Passengers everywhere are feeling the aggravation of fewer flights, packed planes, and a la carte pricing.

"Long lines, fewer planes, no upgrades any more. No customer service," said Robert Scott of Tampa.

"People aren't getting through as fast. People are waiting or getting kicked off their flights. People are just tired of it, and I'm one of them," said Justin Sibert of Baltimore.

After high passengers loads and profits last year, the airlines are rapidly burning through their cash reserves. And even though fuel costs have dropped a wee bit, it's hardly enough to make a dent.

The carriers are cutting routes and retiring aircraft. Some of them will end up parked in the Mojave desert. United is retiring 100 planes which it hopes to sell.

"We haven't seen it diminish this sharply. These cuts are unprecedented. After 9/11 the industry bounced back quickly. This could be an enduring problem," said Schwieterman.

"With gas prices and the way the economy is going, it's going to get worse, right?" said Scott.

There are plenty of airline executives and analysts who say they would not be surprised by bankruptcy or even liquidation of a major carrier should the financial squeeze continue.


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