United plans to ground older jets in effort to save fuel
HIGH OIL PRICES | Cutting part of 737 fleet as airlines try to slash costs, hike fares and fees
Chicago-based United Airlines, the nation's second-largest carrier, said Tuesday it will ground and sell back to lessors 15 to 20 older, narrow-body 737s that are less fuel-efficient than others in its 460-plane fleet. It did not specify what domestic flights or routes could be trimmed.
The move comes with UAL Corp.'s United getting more aggressive in trying to pass on higher fuel costs to its customers. It raised ticket prices by as much as $50 per round trip last week -- an increase matched by other carriers -- and is increasingly charging passengers additional fees for some offerings, such as an extra $25 for checking a second bag.
(AP file)
Fuel is United's largest expense, and every $1 increase in the price of a barrel of oil boosts its costs by about $60 million. Oil prices have shot up by about $20 a barrel in the last six weeks, raising United's projected 2008 costs by about $1.2 billion.
It remains to be seen whether United will need to cut staff, as Delta said it would Tuesday by offering voluntary severance payouts to roughly 30,000 employees -- more than half its work force. It also is cutting domestic capacity another 5 percent.
US Airways Group also said it will further trim flight capacity this year 2 percent to 3 percent -- on top of plans to trim flights by 1.5 percent this year. It also expects to continue to raise fares.
AP