Continental Airlines announced plans to cut 3,000 jobs and eliminate16 per cent of its domestic flights as the US carrier seeks to reduce its costs amid a weakening economy and soaring fuel prices.

The airline follows United Airlines, American Airlines and Delta Air Lines in announcing drastic measures to prop up its bottom line in a market that Larry Kellner, Continental’s chief executive, described today as being "in crisis".

Continental, which announced the cuts a day after United Airlines said it would close down its low-cost Ted brand and retire 70 planes, hopes that many of the job losses will come from voluntary redundancy packages. However, it is determined to cut 6.6 per cent of its 45,000-strong workforce and will begin forcing redundancies if it cannot secure enough volunteers. The airline will ground 67 planes from its fleet of 375 aircraft.

Mr Kellner said: "The airline industry is in crisis. The actions we are announcing today are necessary to secure our future."

The price of fuel has jumped by more than 70 per cent in the past year, while the continued deterioration of the housing market has weakened the economy and hit consumer confidence, reducing demand for flights.

Continental’s shares rose by $0.83, or 5.7 per cent, to $15.33 in morning New York trading.

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