AMERICAS : US airlines cut capacity as oil prices surge

At least four of the major US airlines have either announced plans to reduce capacity or warned they are considering cuts, as the industry flies straight into a storm cloud comprised of a weakening economy and rising oil prices. Both United and Delta revealed plans to remove 15-20 aircraft from their mainline fleets this year. […]


At least four of the major US airlines have either announced plans to reduce capacity or warned they are considering cuts, as the industry flies straight into a storm cloud comprised of a weakening economy and rising oil prices.

Both United and Delta revealed plans to remove 15-20 aircraft from their mainline fleets this year. Delta also plans to reduce employee numbers by 2,000. Meanwhile, Continental and Northwest signaled that further capacity cuts are imminent.

United CEO Glenn Tilton told employees the carrier will be removing "older, less efficient narrow body" aircraft. The cuts will come from its 30- strong Boeing 737-500 fleet, which has an average age of 15 years. Continental CEO Larry Kellner has said that at current oil prices the airline will pay US$1.5 billion more for fuel this year and will reduce capacity thanks to the large number of 737-300s and -500s that it already plans to remove by the end of next year.

Northwest also warned of capacity cuts. Capacity "will be smaller in the first quarter than we intended to be," said CFO David Davis, who added that Northwest’s fleet of DC-9s gives it the flexibility to shrink its fleet further this year. The airline is projecting its fuel costs could be as high as $5.2 billion this year, up dramatically from the 2007 total of$3.7 billion.