Further fears about airline industry as United Airlines announces job cuts

As the US economy weakens and fuel prices continue to soar, US carrier United Airlines has announced dramatic job cuts and is to slash capacity on its domestic flights.

The Chicago-based carrier said it will ground 100 of its planes and the job cull is expected to be between 900 and 1,100. This is in addition to the 500 job losses announced in April.

The planes to be grounded will be 94 Boeing 737s and six of the larger Boeing 747s. The plan will lead to a 17-18% cut in its domestic capacity and international capacity will be cut back by 4-5%.

Last week, the International Air Transport Association (IATA), warned the airline industry faced a grim outlook and passenger numbers would be affected by surging fuel costs and the deteriorating economic situation.

Oil has hit a record $135 a barrel and aviation fuel prices soared 76% in the last 12 months. Many airlines have been struggling as a result.

Oasis Hong Kong Airlines announced it was to stop flying and applied for a voluntary liquidator. US carriers including ATA Airlines, Aloha Airgroup and Skybus Airlines all ceased trading in March.

EOS and Maxjet revealed they would cease flying in May while just last week, business class airline Silverjet ceased flying after it failed to secure funding.

Delta Air Lines, which is merging with Northwest Airlines, recently announced it would cut 2,000 jobs and reduce its capacity by 10% from 2008 levels year-on-year.

Furthermore, American Airlines said it would lay off workers and slash its domestic flight capacity to 12% after the busy summer period in a bid to keep finances in check.

Glenn Tilton, United’s chief executive, said this environment demands that we and the industry act decisively and responsibly. At United, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment.

Finally, Michael O’Leary, chief executive of budget airline Ryanair, warned that most of Europe’s airlines will go bust if oil prices remain high.

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