United Will Drop 15-20 Aircraft From Fleet, 4% of Total

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United Cuts Fleet To Combat Oil
Lisa LaMotta, 03.20.08, 3:10 PM ET

The skies are about to get a little less crowded. United Airlines has announced that it is reducing its capacity in an effort to cut costs.

The airline, owned by UAL Corp. (nasdaq: UAUA - news - people ), said Thursday that it plans to cut its fleet by 15 to 20 aircrafts, or about 4%, from 460 due to the rising fuel costs. Crude oil has hit new highs in recent months, surpassing the $110 per barrel mark earlier this month before falling back down to yesterday's closing price of $101.06. The forward price for jet fuel for the summer has risen by $160, to more than $1,000 a ton, from $840, in early February.

"Continued uncertainty about the overall U.S. economy with the price of fuel at historically high levels has put significant pressure on all U.S. carriers," said United Airlines Chief Executive Glenn Tilton.

The capacity contraction is expected to increase the airlines' revenue per passenger for the first quarter by 8.5% to 9.5% over the year prior, with operating costs per available seat mile, excluding fuel and special items, expected to increase as well to a range between 3% and 3.5%. [Full article]

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