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The Honolulu Advertiser
Posted on: Tuesday, June 24, 2008

United lays off 950 pilots amid surging fuel costs

By Dan Reed
USA Today

United Airlines announced plans yesterday to lay off 950 pilots — about 15 percent 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 Airline Forecasts 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.

Chicago-based 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.

Although United's pilot layoffs are the first announced among the industry's signature employees, they aren't the first overall. Last week the United States' No. 2 carrier said it would eliminate 1,400 to 1,600 management and salaried positions.

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.