The long-awaited next shoe dropping at United Airlines just fell. The Chicago carrier is shedding 1,600 employees and grounding 100 planes by the end of next year, including its older fleet of 737s. The domestic capacity cuts total almost 15% by the end of 2008. The company also will kill its Ted unit, the all-coach, yellow-and-blue Airbus 320s that flew to leisure destinations, opting to install first-class cabins on those planes.
The 737s handle medium-stage routes, to smaller and medium-sized cities. This is the sort of smaller operation everyone predicted for an industry that has no real strategy for coping with crude oil above $120. “This environment demands that we and the industry act decisively and responsibly,” CEO Glenn Tilton said in a statement, five days after the company said it would forge ahead solo, unable to broker a merger deal with US Airways. This downsizing isn’t the first such announcement, and it definitely won’t be the last. Still, it’s not fun to watch.
The 737s handle medium-stage routes, to smaller and medium-sized cities. This is the sort of smaller operation everyone predicted for an industry that has no real strategy for coping with crude oil above $120. “This environment demands that we and the industry act decisively and responsibly,” CEO Glenn Tilton said in a statement, five days after the company said it would forge ahead solo, unable to broker a merger deal with US Airways. This downsizing isn’t the first such announcement, and it definitely won’t be the last. Still, it’s not fun to watch.
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