United Continental Holdings Inc. (UAL) will reduce flights at its loss-making Cleveland hub beginning in April, leading to a reduction of 470 jobs. The difficult decision results from years of financial losses. The airline will reduce its capacity, which measured in available seat miles, out of Cleveland by around 36%, Jeff Smisek chairman and Chief Executive Office of the company said in a letter Saturday to employees.
While decision to reduce flying was driven by the company's continued losses in Cleveland, the timing of the flight reductions has been accelerated by industry-wide effects of new federal regulations that impact the company and its regional partner flying. Those new regulations have caused mainline airlines to hire regional pilots, while simultaneously significantly reducing the pool of new pilots from which regional carriers themselves can hire, Smisek said.
A new federal rule that requires new pilots to have 1,500 hours of flight experience, instead of 250 hours, has caused a shortfall in regional pilot ranks. This is causing a creeping pilot shortage among big airlines, which routinely recruit new aviators from regional carriers.
"Although this is an industry issue, it directly affects us and requires us to reduce our regional partner flying, as several of our regional partners are beginning to have difficulty flying their schedules due to reduced new pilot availability. We need to reduce that flying in our most unprofitable markets, which unfortunately are out of Cleveland," Smisek said.
Smisek said that as a result, the airline will be reducing its average daily departures from Cleveland by around 60%. It expects to be able to keep almost all of its mainline departures (reducing only one of its 26 peak day mainline departures), but will need to reduce its regional departures from Cleveland by over 70%. Together, this will reduce the airline's capacity or available seat miles out of Cleveland by around 36%. The company will make these reductions in roughly one-third increments in each of early April, May and June. When the schedule reductions are fully implemented in June, the company plans to offer 72 peak-day flights from Cleveland, and serve 20 destinations from Cleveland on a non-stop basis, including to all its hubs, and to key business markets like LGA, DCA and BOS. It will also serve from Cleveland on a non-stop basis key leisure markets, like FLL, MCO, TPA and RSW.
The airline's new schedule out of Cleveland will cover 58% of the current Cleveland-originating domestic passenger demand on a non-stop basis, and will permit Cleveland residents to fly to almost every one of the destinations they fly to today, by connecting over one or more of its other hubs.
The airline expects to be able to keep its pilot and flight attendant bases in Cleveland, because it anticipates being able to keep substantially all of its mainline departures from Cleveland. It also expects to be able to keep all of its current technical operations in Cleveland, because it anticipates having the opportunity to work on the mainline aircraft.
However, since the company handles its regional partners' flying above and below the wing in Cleveland, the airline said it will be forced to reduce staffing in airport operations and in catering because of the significant reduction in regional partner flying.
The airline currently expect a reduction in force affecting up to 430 airport operations positions and approximately 40 catering personnel in Cleveland. Those reductions in force will likely begin in June. Each employee will be receiving detailed information relating to these reductions in the coming weeks. Affected airport operations employees may have system displacement options or other opportunities to maintain employment with United, and the airline will work with the IAM leadership to explore other programs that may mitigate the impact of these reductions on IAM-represented airport employees, Smisek said.
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