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Travelers should prepare for unfriendly skies


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But prices to several smaller cities served by fewer flights rose substantially more. Prices between New York and Pittsburgh, for example, doubled to $68 one-way, while a ticket from Newark, N.J., to Cleveland rose 80 percent to $124, according to the data.

For United, as with other carriers, higher fares are only part of the response to what it called an “extraordinarily difficult” operating environment that worsened Tuesday with crude prices rising another $1.89 to a record $119.37.

The nation’s second-largest airline said its revenue growth of nearly 8 percent was more than offset by a $618 million jump in fuel costs, which rose nearly 50 percent in a year.

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After reporting its biggest loss since emerging from bankruptcy in 2006, the Chicago-based carrier said it will trim 2008 spending by $400 million, eliminate 1,100 jobs by the end of the year, cut domestic capacity 9 percent by the fourth quarter and ground 30 of its oldest and least-efficient aircraft.

“The path to sustainable profitability requires us to fundamentally overhaul every facet of our business,” said Glenn Tilton, United’s chairman, president and CEO. “The pressure of high energy prices and a weakening economy are a wake-up call that the pace of change must accelerate.”

Combining with another carrier could be next, especially in the wake of the proposed tie-up this month of Delta and Northwest Airlines Corp. While Tilton did not name Continental, United is known to be in talks with the Houston-based carrier. Consolidation, the CEO said, is “one of the changes required to address the gap between where we stand today and profitability and sustainability.”

United follows American Airlines parent AMR Corp. and Continental Airlines Inc. into the red for the quarter because of fuel costs. Southwest is the only large carrier to have reported a profit so far.

Among smaller carriers, JetBlue Airways Corp. reported an $8 million loss Tuesday that was narrower than expected. CEO Dave Barger said on a conference call that its $138 average fare in March was its highest monthly average ever. But the New York-based airline said fares would have had to have been 2 percent higher for it to have made a profit in the quarter.

The record fuel prices make it virtually impossible for a low-cost startup airline to enter the market for the time being.

Calyon Securities airline analyst Ray Neidl said carriers will need to continue cutting back on flights and raising prices in order to cope with higher oil prices.

“We’ve got too much capacity and prices are too low,” he said. “Airlines just can’t survive with the current air fares if oil stays this high.”

Neidl said he expects airlines will continue to find ways to charge for added services, such as extra bags and more legroom. But that trend, he said, would be happening even without the surge in fuel costs.

“People do want to pay the rock-bottom fare and not have to subsidize other services,” he said.

High oil prices and the global credit squeeze also are affecting demand for new planes. While airlines can still negotiate substantial discounts, European planemaker Airbus said Tuesday that the ever-weaker dollar and high metals prices are forcing it to raise prices. Airbus announced increases of as much as 3 percent to catalog prices — on top of the 2.74 percent annual hike for 2007 already programmed.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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