-- United Airlines uauaannounced plans Monday to lay off 950 pilots — about 15% of its total — becoming the first big U.S. carrier to impose job cuts on cockpit crews.
The reductions will likely be followed at other U.S. carriers as they race to cut costs, fleets and payrolls in response to record jet fuel prices near $4 a gallon. Industry analysts warn that high fuel prices will push some big U.S. airlines into bankruptcy and perhaps liquidation. A recent study by AirlineForecasts predicts that oil prices of $130 to $140 a barrel could result in the loss of 75,000 to 85,000 jobs in the U.S. airline industry, including about 11,500 pilot jobs.
The study, published two weeks ago by the Business Travel Coalition, an advocacy group for corporations with large travel budgets, did not put a specific time frame on those expected personnel cuts. But it predicted likely bankruptcy filings and shutdowns before the end of 2009 if fuel prices remain high.
Airlines are on pace to spend $30 billion more on fuel this year than they did a year ago, the study said. The study's authors expect carriers to be able to offset only about $4 billion of that cost increase through higher fares and increased fees for various services, such as checking bags, previously included in the ticket price.
United lost $537 million in the first quarter, when fuel prices pushed toward $100 a barrel. Its losses, and those of most of its rivals, are expected to grow exponentially now that crude is selling above $130, especially after Labor Day, when the peak summer travel season ends.
Shares of United's parent, UAL, fell $1.07, or 14.9%, to close at $6.09 on a day when the shares of all the USA's big carriers suffered large percentage losses.
Although United's pilot layoffs are the first announced among the industry's signature employees, they aren't the first overall. Last week the USA's No. 2 carrier said it would eliminate 1,400 to 1,600 management and salaried positions. United spokeswoman Megan McCarthy said some layoff notices affecting those workers already have gone out.
Other large airlines, including Delta, Northwest and American, have begun eliminating jobs through voluntary means but have yet to announce layoffs. However, all the big carriers except Southwest have announced significant service cutbacks that will begin taking effect rapidly after Labor Day.
United's fleet will shrink from 460 today to 360 by the end of 2009 with the retirement of 96 Boeing 737s and six Boeing 747s. No new planes are scheduled for delivery.
McCarthy said the airline's overall mainline capacity in the fourth quarter of this year will be down between 9.5% and 10.5% from the fourth quarter of 2007.
That large of a cutback will require significantly fewer workers at United, McCarthy said, but managers have yet to determine how many jobs will be eliminated among other unionized work groups such as flight attendants, mechanics, agents and ground crew.