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While the price of jet fuel has steadily increased over the last few years, the rise in 2008 has been unprecedented, with fuel increasing by more than 37% since the beginning of the year. To address the difficulties created by these record prices, United Airlines is executing an aggressive plan which includes reducing costs across the business, reducing capital expenditures, new fees and realigning capacity to more profitable routes.

In addition, and as part of the plan, United has confirmed it is to remove 94 narrowbody aircraft and 6 widebody aircraft from its operations, retiring its entire fleet of Boeing 737s in the process.

 “Our industry is challenged as never before by the unrelenting price of oil, and United is taking aggressive action to offset unprecedented fuel costs and to strengthen the competitiveness of our business,” said Glenn Tilton, United president, chairman and CEO. “The elimination of our entire B737 fleet and our alliance with Continental are examples of the different approach we are taking to respond to dramatically changed market conditions to deliver better results for all our stakeholders.”

United recently announced a framework agreement to form a unique partnership with Continental Airlines. This agreement will result in extensive cooperation, linking networks and services worldwide to the benefit of customers while creating revenue opportunities, cost savings and other operating efficiencies.

In addition, Continental plans to join United in the Star Alliance, one of the largest airline alliances in the world. This week, Continental Airlines, United Airlines and eight other member airlines in the Star Alliance plan to ask the U.S. Department of Transportation (DOT) to allow Continental to join the group of carriers that already hold antitrust immunity. Approval by the DOT would enable Continental, United and the other immunized Star Alliance carriers to work closely together to deliver competitive flight schedules, fares and service.

Recently Austrian Airlines, Cathay Pacific, Northwest Airlines, United Airlines, SriLankan Airlines, Air New Zealand, Qantas, Continental Airlines, Virgin Blue, American Airlines and Air Canada have announced significant reductions to their international operations. British Airways is also expected to make an announcement about a similar move in the coming weeks.

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