UAL plans 400 lay offs, Shares sink on Charges

UAL Corp., parent of United Airlines, plans to axe 400 more jobs, by offering early retirement packages to customer service and ramp workers. The decision comes as a part of the airline’s endeavor to get compacted and keep costs under control as escalating fuel costs continue to hammer the industry.

The Chicago-based company released a statement saying that it has come to a settlement with the International Association of Machinists for a voluntary retirement program for veteran ground workers, including customer service agents and bag handlers.

Employees who are at least 45 years old and have 15 or more years of service with the company as of Sept. 7 will be eligible.

UAL currently employs some 7,100 customer service agents and 8,000 ramp workers overall, totaling 15,100 combined, said spokeswoman Megan McCarthy.

United said it would try and look for some alternatives to eliminations.

"As we move forward with our previously announced capacity reductions, this agreement with the IAM will assist us in mitigating the impact of involuntary furloughs on our IAM employees," said Scott Dolan, senior vice president of airport operations and cargo.

Domestic flights are being canceled by various carriers across the nation, owing to a 50 percent increase in jet fuel costs this year.

United, the second-largest U.S. carrier reported in a regulatory filing that second-quarter results will be hurt by up to $2.7 billion in charges.

The charges reflect an accounting-related write-down of the value of indefinable assets known as goodwill. A drop in the company's market capitalization and rising fuel prices, have significantly downgraded the company’s intrinsic value that existed at bankruptcy, United said.

United has previously announced plans to cut down its workforce by laying off 950 pilots, about 600 flight attendants and 1,500 salaried workers.

Sluggish economy and hard competition reinforce the effect of soaring oil prices which have already twisted the backbone of many airlines. The stock of several airlines slid sharply on Friday as crude prices shpt up, touching an all-time high of $147.27 a barrel.

UAL shares dropped 54 cents, or 13 percent, to close at $3.63, after trading as low as $3.47, its lowest point since emerging from bankruptcy in 2006.