United, JetBlue to cut flights
Southern California airports faced substantial reductions in flight traffic and revenue after two major carriers Tuesday announced they would cut service at Los Angeles International and Ontario airports this fall.
Citing slowing demand and high fuel costs, United Airlines -- the second-busiest carrier at LAX -- said it would slash about 20% of its Southern California schedule, or about 40 flights a day, this fall. That would include eliminating nonstop service to Frankfurt, Germany, and Hong Kong.
In addition, JetBlue Airways, once one of the fastest growing carriers in the region, said that after Labor Day it would pull out of Ontario, where it began its West Coast expansion in 2000. It currently offers daily nonstop service to New York’s Kennedy Airport.
JetBlue’s move came a week after ExpressJet announced it would stop all service at Ontario on Sept. 2, eliminating 15 nonstop flights to such destinations as Austin, Texas, and Tulsa, Okla.
In all, Ontario airport is expected to lose 37% of its flights in the fall, making the airport one of the nation’s hardest hit by an industrywide rush to cut flights amid soaring fuel costs.
With the service cutbacks, area travelers can expect higher fares, more stopovers and driving farther to catch flights that may no longer be available at a nearby airport.
Much-needed airport improvements could also be waylaid as fewer flights reduce the fees airlines pay to airports. Some airports, such as Oakland, have already shelved major expansion plans.
Tuesday’s announced cuts came as United’s parent, UAL Corp., reported a $2.73-billion loss in the second quarter, most of it to write down the value of the planes it is grounding as part of its service cutbacks, and said it would cut 5,500 workers by the end of next year.
The loss was the largest among the big airlines that have reported quarterly results so far. AMR Corp.’s American Airlines and Delta Air Lines last week reported that they lost a combined $2.5 billion, most of it to write down the declining value of assets because of high fuel costs.
Without the one-time charge, United, the nation’s second-largest carrier, lost $151 million, or $1.19 a share, compared with a profit of $274 million, or $1.83 a share a year ago. Much of the loss was attributed to a $773-million increase in fuel expenses.
Revenue rose 3% to $5.37 billion.
“Our industry is challenged as never before by the unrelenting price of oil,” said UAL Chief Executive Glenn Tilton.
Fuel costs also dampened results for Forest Hills, N.Y.-based JetBlue, which reported that it lost $7 million, or 3 cents a share, compared to a profit of $21 million, or 11 cents a share, a year ago. Revenue rose 18% to $859 billion.
Faced with a weak economy and high fuel expenses, the airline said it would suspend its expansion plans, temporarily cut 10% of its flights in September and curtail growth plans in 2009.
“Revenue gains are clearly not keeping pace with the extraordinary increase in the price of jet fuel,” said JetBlue Chief Executive Dave Barger.
The airline said it would continue to focus its West Coast operations at Long Beach Airport, where it operates 28 flights a day. No cuts are planned for Long Beach, one of the airline’s busiest hubs.
At LAX, United became the latest major carrier to announce a substantial reduction in service starting after Labor Day. Delta, LAX’s fourth-largest carrier, said earlier this month that it would drop about 33 of its 93 flights from LAX and slash nonstop regional service to 13 cities.
As a whole, LAX is expected to lose about 16% of its flights this fall. By November, the number of daily operations -- takeoffs and landings -- is expected to fall to 1,400, a 36% drop from its peak in the fall of 2000.
Separately, Tempe, Ariz.-based US Airways said it lost $567 million, or $6.16 a share. Revenue rose 3%, but the gains were offset by soaring fuel costs. US Airways said it planned to cut 1,700 jobs and add more passenger fees, which the carrier hoped would bring in $400 million to $500 million a year.
Despite dismal earning results, airline shares climbed sharply as the price of crude oil fell $3.09 a barrel to $127.25. UAL shares surged $3.42, or 68%, to $8.41. US Airways gained $1.58, or 59%, at $4.27 while JetBlue added 61 cents, or 16%, to close at $4.50.
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