Thursday June 5, 2008
United Airlines, facing rising fuel costs and a weak US economy, yesterday announced a dramatic downsizing that will see its Ted service discontinued and include the retirement over the next 19 months of 100 aircraft with the aim of reducing mainline capacity by a cumulative 17%-18% for 2008-09.Following a steep first-quarter loss, UA previously announced "fundamental" changes including retiring 30 737s (ATWOnline, April 23). Yesterday it added another 64 of the type to its cut list, meaning that its entire 737 fleet will be grounded. It also plans to retire six 747-400s. It said 80 of the 100 retirements will occur this year with the remaining 20 coming by year end 2009. Its fourth-quarter 2008 mainline capacity will be down 9.5%-10.5% year-over-year with North American capacity lowered by 13.5%-14.5% compared to the 2007 final quarter.
UA additionally will eliminate its Ted product, reconfiguring that fleet's 56 A320s to include first class seats for a return to mainline service by year end 2009. Salaried and management employees and contractors will be cut by 1,400-1,600 including 500 personnel cuts previously revealed. The airline has not determined how many frontline jobs will be affected.
Chairman, President and CEO Glenn Tilton said the "aggressive steps. . . demonstrate our commitment to size our business appropriately to reflect the current market reality, leverage capacity discipline to pass commodity costs on to customers, develop new revenue streams and continue to reduce nonfuel costs and capital expenditures."
In a message to employees, COO John Tague said the cuts are necessary "to assure United's long-term viability." He explained that retirement of the 737 fleet will "dramatically simplify our fleet and reduce our maintenance liability." Further, the retirements will remove the "oldest and least fuel-efficient jets" from service, reducing the average age of UA's fleet by 1.3 years to 11.8 years.
Also announced yesterday were management changes including the departures of Senior VP-Flight Operations and Onboard Services Sean Donohue and Senior VP-United Services Bill Norman. Former Delta Air Lines executive Joe Kolshak will come onboard as senior VP-operations. Alexandria Marren was promoted to senior VP-onboard service while Cindy Szadokierski, who had been responsible for operations control, was named VP-United Express and airport operations planning.
Thursday June 12, 2008
Asia/Pacific airlines are responding rapidly and emphatically to the soaring cost of fuel and slowing global economy. Thai Airways announced that it will quit its nonstop services from Bangkok to New York JFK and Los Angeles and sell off its four A340-500s to help stem losses due to surging oil prices. It estimates that losses on the two routes at current fuel prices would top $120 million. China Airlines told Bloomberg News that it will ax 100 flights per month--10% of its capacity--mainly to the US, while EVA Air told the same news agency that it will cut services by 5%. CI also will eliminate 50 all-cargo flights per month. However, on the upside is the likelihood of launch of weekend direct charter flights between Taiwan and mainland China, which will serve as a prelude to full scheduled services (ATWOnline, May 13).
Meanwhile, Air New Zealand announced it will raise fares for the second time in three weeks and cut services. Domestic and some international airfares will increase 4%, with flights to Australia, Japan and Hong Kong scaled back. These changes follow last month's fare hikes of an average 3% and a lowering of its profit forecast (ATWOnline, May 29). In the past two weeks, Qantas and Jetstar Airways also have announced schedule reductions (ATWOnline, June 9).
by Geoffrey Thomas
Finnair is preparing to reduce capacity by about 2% initially due to the soaring cost of fuel and slowing demand and also may cut jobs, CEO Jukka Hienonen told Helsingin Sanomat. "If we have to make a reduction that equals the level of average overcapacity in Europe, 7%-10%, we will face staff cuts," he said. Finnair held talks with staff Tuesday regarding possible capacity reductions. Hienonen previously told ATWOnline that he is preparing the airline for what he considers to be an impending crisis in commercial aviation. It has seen some softening on its strategic long-haul routes to Asia. "The market cannot currently sustain our growth factor. We can no longer continue with the growth strategy we've had up to now," Hienonen told the paper. Last month, passenger numbers fell 2.4% year-over-year as traffic climbed 6.3% to 1.5 billion RPKs against an 18.1% surge in capacity to 2.31 billion ASKs. Load factor dropped 7.3 points to 65%.
United Airlines and the Assn. of Flight Attendants announced an agreement offering voluntary severance to up to 600 cabin staff. The "one-time opportunity" will be available to flight attendants aged at least 45 who have a minimum 15 years of service with the company as of Aug. 1. UA Senior VP-Onboard Service Alex Marren said the deal "will mitigate the impact of our announced capacity reductions." UA said it "will continue to explore viable alternatives related to capacity reductions with all unions representing its employees" (ATWOnline, June 5).
