Airlines think cutbacks could bring back profits

Frank Pittelli of Long Island, New York, added: “Flying nowadays is great for people who can afford it,” he said. “But with these extra fees, it feels like (the airlines) are just hurting the less fortunate.”

Besides the extra fees, airlines are expected to make big reductions in the number of routes they offer. By parking planes and cutting seating capacity, executives hope to keep demand (and therefore fares) high for the remaining tickets. According to estimates by US Airways, any roundtrip ticket needs to cost more than $299 to cover the cost of fuel.

So US Airways said it would further cut capacity 6 to 8 percent on domestic flights in the fourth quarter, and then cut another 8 to 10 percent in 2009.

United will trim overseas routes by 7 percent in the fourth quarter. Routes to be eliminated will include Denver-London, Los Angeles-Frankfurt and San Francisco-Nagoya, Japan. Tilton said United will close its Nagoya station.

Tilton said fourth-quarter mainline domestic capacity will shrink 16 percent compared with the previous year. United dropped about 50 routes from its domestic schedule on Thursday alone as it takes 100 aircraft out of its fleet, including all of its 737s, Tilton said in a hot line message to employees on Tuesday.

JetBlue expects September capacity to be down 10 percent and does not expect to grow next year. JetBlue thinks capacity will slip one to three percent in the third quarter and fall six to nine percent in the fourth quarter.

US Airways and United also announced that they would shrink their work force even more than previously announced.

United previously announced plans to eliminate roughly 3,800 jobs through furloughs, layoffs, and early retirement packages, including as many as 1,600 from salaried workers and management. But on Tuesday the company said it will aim to cut 7,000 jobs by the end of next year in conjunction with fewer flights, with the additional reductions coming from front-line workers.

US Airways said it cut more management jobs and will reduce its 2,000 positions, an increase from the 1,700 positions it previously announced.

Despite the weak earnings reports, airline shares soared in Tuesday’s session as oil prices tumbled. UAL was the biggest gainer after it signed an extended credit-card agreement with Chase Bank USA and accomplished other financial maneuvers that it said would add $1.7 billion to its cash balance, including $200 million it expects to get over the next two years.

Airline shares are still far below their values around the start of the year. Falling precipitously as oil prices shot up.

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