U.S. airlines cut capacity on profit fears

NEW YORK, Dec. 4 (UPI) -- Four major U.S. airlines cut their 2008 U.S. capacity plans Tuesday on growing fears high oil prices and a weak U.S. economy will significantly hurt earnings.

United Airlines Inc., Delta Air Lines Inc., Continental Airlines Inc. and Southwest Airlines Co. said rising fuel prices coupled with a forecast drop in demand threatened their financial recovery.

"We see no business case to grow domestically,'' United Airlines Inc. parent UAL Inc. Chief Financial Officer Jake Brace told a Calyon Securities (USA) Inc. airline conference in New York.

United, the world's No. 2 carrier, said it would cut capacity in its primary U.S. jet operations 3 percent to 4 percent next year. United operated under bankruptcy protection for more than three years, emerging Feb. 1, 2006.

No. 3 Delta, which emerged from bankruptcy April 25, will cut capacity as much as 5 percent, it said.

No. 4 Continental said it would slow growth to 2 percent to 3 percent from 3 percent to 4 percent.

Southwest, the largest low-cost carrier, said it would cut its capacity growth for a third time, to 4 percent to 5 percent.

Southwest said separately it would also cut the number of new airplanes it purchases in 2008 to five or 10, rather than the 34 airplanes it originally planned to buy.