Airlines move to make bad situation worse

"We are in uncharted waters here (with potential mergers and record-high fuel prices) and we need to see how everything shakes out," the Illinois Democrat said in a telephone interview. As air service to rural areas declines, he said, all options "will have to be on the table."

UAL Corp.'s United 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 55,600 workers worldwide.

"With fuel at historically high levels, United and our competitors need to redefine ourselves in this marketplace," Glenn Tilton, United's chairman, president and CEO, said in a message to employees.

United said it plans to ground its entire fleet of 94 Boeing B737s as well as six of the company's 747s — its oldest and least fuel-efficient planes. It previously said it was going to mothball 30 of the jets. It is scrapping the coach-only Ted service and reconfiguring those planes to include first-class seats.

Besides the larger reduction in domestic capacity, it also is scaling back international capacity by 4 to 5 percent.

Regardless of the impact on travelers, industry analysts hail the ongoing cutbacks as necessary.

"You can't just cut 17 percent of your domestic capacity if you're not in trouble," said Brian Nelson of Morningstar. "United is definitely taking the lead here in terms of the magnitude of cuts needed. However, it's going to also require others to make those steps."

Grounding the planes quickly could be a challenge for United. That is because half of the 737s it wants to pull from service are operated under leases, not owned outright.

"I think what they'll do is wait until they get toward the end of the leases before they park them," said Mike Boyd, president of aviation consultancy The Boyd Group.

United declined to say which companies it leased the planes from, but the contracts are likely spread among a number of different companies.

John McMahon, chief executive of Genesis Lease Ltd., which leases three Airbus A320s to United, said lease contracts typically run five years or more. Lessors may be willing to renegotiate the terms of an existing deal if they can line up other customers, but contracts typically don't require them to, he said.

"It's not unlike if you're renting an apartment, and you have a contract ... and you want to get out of it," McMahon said. "It's not that straightforward."

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