CHICAGO – United Airlines will eliminate at least 1,000 salaried and management jobs by the end of the year as part of its efforts to reduce costs, CEO Glenn Tilton said Wednesday.
The employees to be laid off from the nation's second-largest airline represent about 11 percent of its 9,400 salaried workers and nearly 2 percent of the company's work force of approximately 57,000.
United, a unit of UAL Corp., (UAUA) acknowledged last month that its costs were too high, even after the completion early this year of its three-year bankruptcy restructuring. It set a target of $400 million in additional cost reductions but had not cited the number of salaried and management jobs it plans to cut.
Tilton told analysts in New York that the job cuts are part of a $100 million reduction of general and administrative overhead expenses. In addition, he said, the Elk Grove Village, Ill.-based company is reducing purchase services by $200 million and cutting advertising and marketing costs by $60 million, among other moves.
"We're going to reduce our costs further, we're going to take full advantage of the network that we have preserved to optimize our revenue, and we are going to deliver to our customers a consistently superior and consistently improving customer experience," Tilton said at the Merrill Lynch Global Transportation Conference.
Soaring oil costs have continued to hurt the bottom line for United and other carriers, and Tilton said the airline is refining its route schedule accordingly, although he did not specify flights to be dropped.
"Said simply, some long-haul routes that worked at $50 a barrel don't fly at $65 a barrel," he said. "We'll continue to redeploy assets to other opportunities, such as the recently announced Washington-Kuwait route, which we'll initiate in the fall."
Tilton also said United's second-quarter cost numbers are somewhat better than the guidance it gave during a May 8 conference call. Costs per available seat mile, excluding fuel and special charges, are 7.52 cents, which he called competitive. Cash flow is "very strong" and revenue performance is competitive, he said, without giving specifics.
United shares, which had lost a third of their value since they began trading in February, rose 62 cents, or 2.3 percent, to $27.65 in afternoon trading on the New York Stock Exchange.