Recession squeezes airlines to cut flights, staff (Roundup)

Jul 21, 2009, 17:16 GMT

Washington - Continental Airlines plans to cut 1,700 jobs, Southwest gave 1,400 workers voluntary buyouts and United will cut overseas flights by 7 per cent, according to company announcements on Tuesday.

All three US carriers have lowered ticket prices to attract summer tourist dollars, but a decrease in corporate travel has undermined the effects of lowered fuel costs, forcing the companies to make more cuts to payrolls and reduce capacity.

United's second-quarter loss of 323 million dollars was less than anticipated by 10 analysts surveyed by Bloomberg financial news, while Continental's 213-million-dollars loss was 1 cent per share worse than anticipated.

Southwest, the largest low-fare carrier which serves the US domestic market, reported a profit of 54 million dollars, down from 321 million a year ago but exceeding the predictions of surveyed analysts by 1 cent per share.

Southwest said that 1,400 workers had accepted buyout offers made in May, shrinking the carrier's workforce by 4 per cent, according to Bloomberg.

'Demand for business travel remains weak, and we continue to stimulate traffic with more discounted and promotional fares,' Southwest chief executive officer Gary Kelly said.

Continental's job cuts come on the heels of leaves of absence for 700 flight attendants and layoffs of 500 reservation agents.

Continental President Jeff Smisek told Bloomberg that he believed the drop in business travel to be finished, but said the carrier might have to make more cuts before demand rises again.

United didn't announce layoffs Tuesday, but said in June it would be cutting 600 flight attendant jobs, making total job cuts since mid-2008 more than 9,000.

Both Continental and Delta Airlines will will add a 5-dollar fee to check luggage at the airport instead of online beforehand, bringing the charge to 20 dollars for the first bag and 30 dollars for the second.