Monday, November 18, 2002
United says cutbacks will help it become profitable by 2004.
CHICAGO (AP) -- The parent company of United Airlines said Sunday it would cut 9,000 jobs and reduce its flight schedule by an additional 6 percent as part of a restructuring plan tied to the carrier's effort to return to profitability.
UAL Corp. faces a Dec. 2 deadline in its fight to avoid a bankruptcy filing. It hopes to receive a $1.8 billion loan guarantee by then.
The carrier has been talking with the Air Transportation Stabilization Board over the last week about its loan application and what it needs to do to qualify for the loan guarantee.
The Elk Grove Village, Ill.-based airline said that with the cutbacks, it should be profitable by 2004.
"Our plan is intended to restore United's financial health, and it gives us the ability to repay ATSB-guaranteed loans," Glenn Tilton, United's chairman and chief executive officer, said in a statement. "The plan aligns our costs and revenues, while building a platform for future growth."
Cuts by 2004
United spokesman Jeff Green said the airline's staff would be cut to 74,000 from the current 83,000 by 2004. The additional 6-percent flight reduction would decrease the size of the nation's No. 2 carrier by 23 percent overall from its size before the Sept. 11, 2001, terror attacks.
Spokeswoman Chris Nardella declined to discuss which jobs are being targeted by the cuts. Earlier this month, United said it plans to furlough 2,700 flight attendants beginning in January because of a reduced flight schedule planned for next year. Officials said the layoffs would bring the number of flight attendants on furlough to roughly 4,800.
United said it also plans to retire an additional 49 aircraft, defer all scheduled aircraft deliveries through 2005 and lower capital spending.
More savings will come from an agreement among United's employees to contribute $5.8 billion in labor cutbacks over 51/2 years. In addition, a code-sharing agreement with US Airways is expected to bring in more than $200 million annually, and a revenue-sharing agreement with Star Alliance partner Lufthansa is expected to bring in about $90 million annually.
The airline also plans to save money by adding 109 regional jets in conjunction with its United Express partners by April 2004, resulting in a fleet total of 236 United Express regional jets, Green said.
"We're involved in an extraordinary process at United, addressing our immediate-term financial issues and fundamentally transforming our business," Tilton said.