Jun 4, 2008 6:13 pm US/Central
United Airlines Announces Major Cutbacks
CHICAGO (CBS) ―
Days after merger talks with US Airways were put on hold, United Airlines announced a bombshell on Wednesday: dramatic reductions in service and the elimination of more than 1,000 jobs.
As CBS 2's Vince Gerasole reports, United's crisis is cutting into the core of the airline's operating system.
Passengers paying more money for less service know the frustrations of air travel.
Wayne Levy of Deerfield said, "It's a pain in the neck."
Wilma Roth of Salem, Ore., said "I don't think they treat the passengers like you would expect."
But United showed just how painful it is to run an airline on Wednesday by announcing massive cutbacks. It's discontinuing its low-fare airline Ted, retiring 100 of its aircraft and cutting as many as 1,100 jobs, in all a double digit reduction of 17 percent of its capacity through 2009.
DePaul University Transportation Expert Joe Schwieterman said, "It means that they see a sea of red ink now that can only be stopped by rethinking the whole network. They have massive cuts across the board."
Transportation experts blame it all on the high cost of fuel, now nearly 40 percent of operating costs.
"It just shows the airline management has come to terms with these high fuel prices. The only way out is fairly dramatic cuts. It's clearly going to ripple through Chicago aviation," Schwieterman said.
Critics point out the financing of Chicago's airport system relies heavily on the health of airlines as a whole, but those preparing for the next phase of the city's $15 billion O'Hare expansion project believe United's problems won't impact its commitments to their next phase of growth.
Rosemarie Andolino, Executive Director of the O'Hare Modernization Program, said "If we had the full build today, the carriers would be able to save close to $400 million in fuel costs so there would be a savings to their bottom line."
In the meantime, those who work for the friendly skies are bracing for turbulence ahead.
As a result of the cuts, air travelers can expect fewer flights to some major destinations, making it harder to find a seat. It also means less competition between carriers and higher costs.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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