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United initiates massive fleet reduction

Star Alliance member United Airlines plans to remove a total 100 mainline aircraft, or about 25% of its entire fleet - including its 94-strong Boeing 737 fleet and six Boeing 747s - as part of a larger plan that will see the US major dramatically slash capacity, initiate layoffs, and eliminate its low-cost product Ted.

Some 30 737s were previously earmarked for retirement. But soaring fuel prices have prompted United to pull down the remaining 737 fleet, its oldest and least efficient jets, provided the carrier can work out terms with certain lessors.

According to Flight’s ACAS database, United operates a total fleet of 400 aircraft, including 64 737-300s and 30 737-500s. The carrier owns about two thirds of the -500s, but leases a large portion of the -300s from a mixed bag of lessors. Its 747 fleet comprises 30 747-400s.

About 80 aircraft are expected to be out of the system by the end of 2008, with the other 20 coming out by the end of 2009, says United in a statement today. These measures will facilitate a 14% year-over-year reduction in fourth quarter mainline capacity. Over the 2008 and 2009 period, cumulative mainline domestic capacity will be reduced between 17% and 18% and cumulative consolidated capacity between 9% and 10%.

Schedule changes will be principally accommodated through "modest reductions of underperforming markets" and through "frequency reductions" while retaining a commitment to all five US hub, it adds.

Additionally, United is abolishing its Ted product and reconfiguring the unit’s 56 Airbus A320s to include first class seats. The reconfigurations will begin in spring 2009 and be completed by year-end 2009.

In line with these changes, the airline expects to reduce the number of salaried and management employees and contractors by 1,400 to 1,600, including the previously announced 500 employee reduction by year-end.

The company says it will determine the number of front-line employee furloughs as it finalizes the schedule over the next month.

"Today we are taking additional, aggressive steps that demonstrate our commitment to size our business appropriately to reflect the current market reality, leverage capacity discipline to pass commodity costs on to customers, develop new revenue streams and continue to reduce non-fuel costs and capital expenditures," says United chief executive Glenn Tilton.

"This environment demands that we and the industry act decisively and responsibly. At United, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment."

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