That came two weeks after a similar move by AMR Corp.'s American Airlines, the only U.S. carrier larger than United, which said it would slash domestic capacity 11 to 12 percent after the peak summer travel season. American already has begun eliminating flights, as have No. 3 Delta Air Lines Inc. and others.
Then it was United:
United Airlines said Wednesday that it's cutting up to 1,100 more jobs, removing an additional 70 fuel-guzzling airplanes from its fleet and slashing domestic capacity as it tries to cope with spiraling fuel prices.
The nation's No. 2 carrier said it plans to cut an additional 900 to 1,100 salaried, contract and management employees by the end of the year, in addition to 500 previously announced job reductions. The combined reductions mean the airline is cutting nearly 3 percent of its 55,000 workers worldwide.
Officials said the "aggressive" moves are designed to the help the subsidiary of UAL Corp. weather an "unprecedented fuel environment." Crude oil futures prices peaked at a record above $135 a barrel nearly two weeks ago and airline fuel prices have been rocketing higher as well.
Now it's Continental. They sent the following letter to their employees:
We've always said that you deserve open, honest and direct communication. This letter and the attached employee bulletin and Q&A are part of that commitment.
The airline industry is in a crisis. Its business model doesn't work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response.
While there have been several successful fare increases, those increases haven't been sufficient to cover the rising cost of fuel. As fares increase, fewer customers will fly. As fewer customers fly, we will need to reduce our capacity to match the reduced demand. As we reduce our capacity, we will need fewer employees to operate the airline. Although these changes will be painful, we must adapt to the reality of today's market to successfully navigate these difficult times.
The attached employee bulletin and Q&A outline some of the steps we are taking to address this industry crisis. The situation for all airlines is serious, and the actions we are announcing today are necessary to secure our future. We regret the loss of jobs caused by this crisis, and we will do our best to minimize furloughs and involuntary terminations.
These actions will help Continental survive this crisis. You have our ongoing commitment to keep you informed as the industry evolves and adapts to these unprecedented challenges. It is important that we all keep our focus on working together during these difficult times.
That makes me feel warm all over. How about you?
Seriously, it should come as no surprise that an industry heavily reliant on the price of fuel for profitability is experiencing problems. On top of that, have you flown lately? Am I the only person who finds the process extremely uncomfortable? I'm 6 feet tall and weigh 190. I am literally the average American male. And the seating arrangements suck.
Anyway -- let's see what the charts tell us.
The American chart is downright ugly. Notice the following:
-- Prices are below the 200 day SMA
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices have been dropping since last summer
-- Prices are below the 200 day SMA
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices have been dropping since last summer
-- Prices are below the 200 day SMA
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices have been dropping since last summer
These are terrible charts -- unless you're going short. And they tell us the possibility of a bankruptcy is in the cards.
