United Air Lines Cutting 1,000 Jobs in Wake of Losses : Discount Battles Also Cited; Further Economies Promised
United Airlines is eliminating the jobs of just over 1,000 workers, mostly management employees, as it copes with last year’s financial losses caused by fare wars and labor costs.
The cuts are “a short-term reduction” and will be followed by further cost-cutting measures, United spokesman Matt Gonring said Friday.
“Over the long term, we have a strategy to cut unit costs as well,” he said, but would not elaborate.
In addition to the job cuts, which affect 1,016 workers, there will be no salary increases for officers and management employees in 1987, Gonring said in a telephone interview from United’s headquarters in Elk Grove Village, Ill.
The layoffs, primarily at United’s headquarters, will begin next week, United President James J. Hartigan said.
Safety Factor to Prevail
The airline “will save $45 million in non-personnel expenses with across-the-board cuts in every area of the company not related to service and not related to safety,” according to Gonring.
United employs 61,000 people, with about 4,000 at its corporate headquarters, he went on. The airline reported a fourth-quarter 1986 net loss of $31.3 million and a loss for the year of $80.6 million.
Gonring blamed the carrier’s weak financial position primarily on “a great deal of fare discounting in the first half.”
“Industry consolidation and growth among low-cost airlines have made United Airlines’ labor expenses somewhat higher than many of its competitors,” he said.
“We must cut expenses in a cost-effective manner, but we’ll continue to emphasize our product and the quality product will generate additional revenue,” Hartigan said.
New Round of Fare Wars
United’s announcement came amid a new round of airline fare wars.
Continental and Eastern unveiled their “Maxsaver” campaign Thursday, touting a new type of restricted fare discounted up to 40% from “supersaver” fares.
United responded by saying it would match the cuts where it had the same number of scheduled flights.
On Friday, American Airlines, Pan American World Airways and USAir announced various types of fare-cutting programs, while Delta Air Lines said it will compete with the new Eastern and Continental fares but refused to say whether it will match its rivals’ fares across-the-board.
