Continental plans job cuts; United to cut flights

By
Charisse Jones and Dan Reed, USA TODAY
July 21, 2009, 8:38 PM ET
2 min read

— -- The recession continues to take its toll on airlines. Continental cal said Tuesday that it would slash 1,700 more jobs, and United said it would cut more flights in response to fewer travelers.

The announcements came as most airlines this week issue earnings reports for the second quarter.

Continental reported a loss excluding one-time items of $169 million, or $1.36 a share. It was in line with analysts' estimates. Its net results for the second quarter also were negative — a loss of $213 million, or $1.72 a share. In the second quarter of last year, Continental's net loss was $5 million, or 5 cents a share.

Despite lowering fares, Continental's total number of passengers declined 8.6%. As a result, the airline announced the job cuts for this fall. They're on top off the loss of 1,200 flight attendants and reservations agents previously announced.

It also said it would begin charging passengers $20 to check one bag and $30 for a second, up $5 in each case, on Aug. 19. An extra $5 fee will also be tacked on when making reservations by phone.

"We do think we have hit bottom," Continental President Jeff Smisek said. "But we don't know how long we'll bounce along the bottom or what the rate of recovery will be."

Southwest luv, the USA's leading discount carrier and the largest U.S. airline in the number of domestic passengers boarded, reported a second-quarter net profit of $54 million, or 7 cents a share.

After posting losses in each of the previous three quarters, the second quarter marked a return to profitability for the Dallas-based airline that had gone 18 years without a losing quarter before the third quarter of 2008.

But CEO Gary Kelly refused to predict a third-quarter profit this year. In the second quarter, weak demand and aggressive price-cutting caused Southwest's revenue to fall 8.8%.

United ual also eked out a $28 million net profit, or 19 cents a share. But excluding one-time accounting items, the USA's No. 3 carrier lost $323 million, or $2.23 a share.

In response, United will make an additional 7% cut to international flight capacity after Labor Day through the end of the year, trimming some flights, such as one of the four flights from Washington's Dulles airport to London's Heathrow.