Transport Airlines

United Airlines Is Cutting Cleveland Hub on Path to $2 Billion in Savings

Feb 03, 2014 5:00 am

Skift Take

The promises about keeping the hub for two years, post-merger will certainly resonate with US Airways and American Air hubs worried about whether they will be on the chopping block in a couple of years.

— Jason Clampet

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Toru Hanai  / Reuters

A United Airlines plane in a file photo. Toru Hanai / Reuters

United Continental Holdings Inc., the world’s second-biggest airline, is dropping Cleveland as a hub for connecting flights and cutting 470 jobs amid a cost-cutting push, according to a copy of an employee memo.

Average daily departures will shrink about 60 percent by June as the Chicago-based company eliminates most regional flights from Cleveland, Chief Executive Officer Jeff Smisek said in the Feb. 1 letter. New schedules will be in place by June, he said.

“Our hub in Cleveland hasn’t been profitable for over a decade, and has generated tens of millions of dollars of annual losses in recent years,” Smisek said in the memo. “The demand for hub-level connecting flying through Cleveland simply isn’t there.”

The move comes as United, which said in November it was eliminating $2 billion in annual expenses by 2017, struggles to control costs since its merger with Continental Airlines in 2010. Expenses are growing faster for each seat flown a mile than revenue on the same basis.

United expects to cut 430 airport-operations employees and 40 catering workers while keeping pilot and flight attendant bases in Cleveland, Smisek said.

The company’s predecessor carriers agreed in 2010 to keep most Cleveland flights for at least two years after the merger. The Ohio city was Continental’s smallest domestic hub airport.

Editors: Christine Maurus, Sylvia Wier. To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net. To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net. 

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