Rising Fuel Cost Hits United Airlines

April 22, 2008

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United Airlines parent UAL Corporation reported a $537 million first-quarter loss due to rising fuel costs. This is the Chicago-based company's biggest loss since emerging from bankruptcy in 2006.

UAL saw an eight percent increase in revenue from the first quarter of 2007. But the growth wasn't enough to offset a $600 million jump in fuel costs. David Field is Americas editor for Airline Business magazine. He says United's loss was worse than expected, mainly due to its older fuel-guzzling fleet.

FIELD: Even though United does very nicely on a lot of international routes, on domestic routes it faces low fare competition and it simply cannot charge prices on domestic routes that cover its cost of operation.

United plans to ground 30 planes and eliminate 1100 jobs to make ends meet. Field says with the continued fuel costs these cut backs might allow the airline to break even at best.