United to cut fleet, routes to reduce fuel costs

CHICAGO -- United Airlines said Tuesday it plans to ground as many as 20 airplanes, or 4 percent of its fleet, and further cut capacity in 2008 to soften the blow of soaring oil prices that could add $1 billion to its fuel tab over last year.

The nation's second-largest carrier said it will sell back to lessors 15 to 20 older, narrow-body 737s that are less fuel-efficient than others in its 460-plane fleet. It did not immediately specify what domestic flights or routes could be trimmed.

UAL Corp.'s United, like other airlines, has grown more aggressive in passing on higher fuel costs to customers. It raised ticket prices by as much as $50 per round trip last week -- an increase matched by other carriers.

"We are taking a prudent step now by reducing our fleet, taking assets out of the network that don't make sense at these fuel prices, to better position United to be successful in an ever-challenging environment," Chief Financial Officer Jake Brace said. He outlined the changes at a conference for airline industry investors in New York.

Using fuel prices to justify cost-saving reflects a management team that refuses to acknowledge the real problems, said Captain Steve Wallach, chairman of the United Chapter of the Air Line Pilots Association.

"Instead of doling out hundreds of million of dollars to shareholders and pocketing millions of dollars in bonuses and salary increases, perhaps management should reinvest that money into our operation," Wallach said in a statement.

CEO Glenn Tilton defended the need to pass on higher costs to customers in a message to employees, noting that the economic environment has changed significantly over the past several weeks.

"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," he said. "U.S. airlines must function like other businesses, making investments and providing service where we can do so profitably."