UAL, the parent of United Airlines, America's second-largest airline, today unveiled dramatic job cuts and slashed domestic capacity, as it struggles with rising fuel costs and America's weakening economy.

The company said that it would cut capacity on its domestic flights by 14 per cent in the fourth quarter, shedding 100 planes from its fleet. Up to 1,100 workers will lose their jobs, on top of 500 previously announced redundancies. The company had already said that it would cut 30 Boeing 737s from its fleet.

Glen Tilton, the chairman and chief executive, said that high fuel costs meant that the company must act decisively to redefine itself. The downsizing follows American Airlines' announcement last month that it would cut domestic capacity by up to 12 per cent. In March, Delta Air Lines, which is merging with Northwest Airlines, said that it would shed 2,000 jobs and reduce its capacity by 10 per cent from 2008 levels year-on-year.

On Monday the International Air Transport Association forecast that its 230-member airlines faced losses of $2.3 billion (£1.2 billion) this year due to soaring fuel costs. Crude oil futures prices peaked at a record high of $135 a barrel nearly two weeks ago, sending fuel prices rocketing.

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