United Airlines cuts 7000 jobs and signs a deal with Chase BankJuly 23rd, 2008 - 2:18 pm ICT by Amrit Rashmisrisethi
United Airlines, known to be one of the world’s largest carriers said , that it would cut more than 7,000 jobs by the end of 2009 due to loss from fuel rise.
The reductions consist of 5,500 aircraft and airport workers s, UAL said in a statement. The Chicago-based carrier disclosed the cuts as a second-quarter net loss of $2.73 billion.
United Airlines deficit pushed the collective loss among the three biggest U.S. carriers to $5.22 billion, American Airlines and Delta Air Lines. Jet fuel averaged 80 percent more than a year earlier.
“Our industry is challenged as never before by the unrelenting price of oil,” Glenn Tilton, the chief executive, said in the statement.
The loss was $151 million, or $1.19 a share, UAL said. Year-earlier earnings were $274 million, or $1.83 a share.
United Airlines parent UAL Corp. is extending the credit card agreements with Chase Bank USA, which generates a $600 million payment from the bank and increases its cash fund for about $1.2 billion.
UAL shares spiked $2.72, or 54.1 percent, to $7.70 in Tuesday morning trading.
Chase already has the contract for United’s frequent-flyer affiliated credit card. By extending those agreements, United says Chase will pay it $600 million for advance payment for frequent flyer miles for the credit card. UAL said it also expects the new contract to improve their cash flow for about $200 million in the next two years.
UAL also says Chase is shrinking the size of the hold back under its credit card processing agreement, freeing up about $350 million in cash that was restricted.