Ted Airlines to stop flying

United Airlines has said it is discontinuing operations of the discount airline Ted Airlines, one of its two airline divisional brands.  United is also retiring aircraft and reducing jobs because of costs of fuel.

With its corporate offices in Chicago, United Airlines is a major airline of the United States and a subsidiary of UAL Corporation.

In a statement, United Airlines announced that it plans to “re-configure Ted Airlines’ fleet of 56 Airbus 320 aircraft with first-class seats and re-brand them as United planes from the spring of 2009.”

United Airlines also revealed that it would get rid of 100 aircraft from its fleet by way of retiring the oldest and the least fuel-efficient planes. The move, according to the airline, would help reduce its domestic mainline capacity by 18% by the year 2009.

Also, United Airlines will lay off 1,400 to 1,600 management-level employees – that is, almost 3% of the airline’s total workforce.

In the statement, Glenn Tilton, chairman and chief executive officer of United Airlines, said: “This environment demands that we and the industry act decisively and responsibly. At United Airlines, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment.”

United Airlines had launched Ted Airlines, the discount airline brand, in 2004, almost a year after Delta Air Lines started the low-cost airline brand named Song.

Analysts had opined that both United Airlines and Delta Air Lines introduced the low-cost carriers in an effort to attract leisure travellers from discount airlines like Southwest Airlines, JetBlue Airways, America West (now US Airways), Frontier Airlines, and AirTran.

Delta Air Lines stopped Song – which was reputed for offering in-flight amenities like signature cocktails, food, movies and video games – shortly after filing for Chapter 11 bankruptcy protection in September 2005.

Ted Airlines offered extras almost similar to what Song did, with XM Satellite radio and free movies to boot. Ted has remained virtually inactive in the past few years.

Meanwhile, United Airlines said in the statement that its traffic in May 2008 fell by 4.1% as it grappled with high costs of fuel and a weakening economy in the United States.

The airline flew 9.80 billion revenue passenger miles in May 2008 – down from 10.21 billion in May 2007. (A revenue passenger mile, which is one passenger flown one mile, is the standard traffic index in the airline industry.)

In yet another downturn, United Airlines’ load factor (or, percentage of seats filled) declined to 82.6% from 84.6% a year ago .