United Continental pares 2011 capacity growth in face of rising fuel prices

United Airlines is cutting domestic capacity but international capacity will still rise this year. Photo: United Airlines 747 in new livery. Courtesy, UCH.

United Continental Holdings, citing rising fuel prices, announced Monday evening that full-year 2011 consolidated (mainline and regional) capacity for United Airlines and Continental Airlines will be flat compared to 2010, reduced from prior guidance of a 1%-2% rise.

Reductions will take place in two stages. Effective with the May schedule, UCH will trim consolidated capacity by 1% from prior plans. It will take out 4% effective with the September schedule. As a result, fourth-quarter domestic capacity will be down 5% compared to the year-ago period; however, international capacity will be up 2% for the quarter. For the full year, domestic capacity will decrease 1.5 %-2.5% compared with 2010 while international capacity will increase 2.5%-3.5% year-over-year.

"The capacity reductions will come from reducing flight frequencies, indefinitely postponing the start of certain markets and exiting less profitable routes, primarily in our domestic schedule," UCH stated. "The modest increase in international capacity allocates our aircraft on more profitable routes." In a message to employees, the company noted, "About half of our domestic capacity reduction will come from regional flying, much of it through a reduction in daily frequencies or day-of-week flying and, in some cases, exiting routes."

UCH said it is also analyzing the impact of removing "certain less fuel-efficient aircraft from our fleet and will be taking other cost-saving measures." In the employee message, UCH said that although the capacity revisions did not include layoffs of frontline employees, "We can't continue to cut capacity without reducing the size of the workforce."

UA/CO follows Delta Air Lines and American Airlines in lowering 2011 capacity owing to soaring fuel costs (ATW Daily News, March 2).