(Reuters) - United Continental Holdings (UAL.N) will reduce flights and 1,300 jobs at Houston’s biggest airport after that city gave Southwest Airlines (LUV.N) approval to add international flights at a smaller airport in Houston.
United’s biggest hub is Houston’s George Bush Intercontinental Airport. The City Council of Houston voted on Wednesday to allow Southwest to expand William Hobby Airport to build new gates and a customs facility for international routes.
“We expect to begin a 10 percent reduction in planned (Intercontinental) capacity beginning with the fall 2012 schedule change,” United Continental said in a Wednesday memo to workers that was obtained on Thursday.
The Hobby expansion had been opposed by United Continental, which had released a report earlier this month saying international service at Hobby would drain passengers from Intercontinental.
In that report, United said the diversion of traffic from Intercontinental would lead it to cut its planned capacity at that airport by 10 percent, costing 1,300 jobs.
“We regret the job loss, but we will be forced to reduce employment” at Intercontinental as a direct result of the City’s approval of the Hobby expansion, the staff memo said. Job cuts will begin in the fall and occur over time, United said.
Southwest agreed to invest at least $100 million to cover costs tied to the Hobby upgrade. Construction at Hobby is expected to take two years, with international flights not expected to start there until 2015.
United has a total of more than 85,000 employees.
Reporting by Karen Jacobs; editing by Carol Bishopric