More troubles from the airline sector: United Airlines and Continental Airlines announced measures to cut costs through decreasing its workforces and total number of flights. This comes as other carriers have announced higher fares, less flights, and additional charges.
United is not only eliminating another 1,100 jobs and cutting domestic flights by 14%, it's also ending its discount airline Ted (USA Today reports Ted's "56 Airbus A320s will be reconfigured with United First-class seats"). United's Boeing 737s and Boeing 747s, 100 altogether, will be retired. Travel experts say leisure travelers will feel the brunt (no more $99 fares), an analyst said United's decision was "a large step toward regaining sustainable profitability."
Continental, which has a hub at Newark Liberty International Airport, will cut 3,000 jobs and reduce its flights by 11% by the end of the year. Interestingly, Continental's chief executive Larry Kellner and president Jeff Smisek "said they will not take a salary for the rest of this year and will decline bonuses." (Kellner made about $6.6 million in 2006, with $4.1 million in cash.)
Their statement to employees said, "The airline industry is in a crisis. Its business model doesn’t work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response.” Continental will be downsizing its fleet by 31 planes by next year and hopes employees will take packages to voluntarily leave.