United Airlines said Saturday it will drop its money-losing hub in Cleveland, slashing its daily flights and eliminating 470 jobs.
The company's CEO Jeff Smisek announced in a letter to employees that the airline will no longer use Cleveland to connect fliers coming from other airports around the country. As a result, United's daily departures from the city will fall from 199 currently to 72 by June.
"Our hub in Cleveland hasn't been profitable for over a decade, and has generated tens of millions of dollars of annual losses in recent years," Smisek states. "We simply cannot continue to bear these losses."
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United said in November that it aims to cut $2 billion in annual costs in the coming year by shifting flights, making workers more productive, and improving its maintenance procedures.
Similar cutbacks have affected many other small hubs in cities such as Memphis, Cincinnati and Salt Lake City amid a wave of airline mergers over the last five years.
Because it's hard to fill a plane between, say, Indianapolis and Paris, airlines use hubs like Cleveland to gather passengers and connect them to the flights they want. People who live in a hub city get a wider selection of destinations because their airport has more flights than it would if it was limited to the flights supported by local traffic.
Cleveland was a hub for Continental when it merged with United in 2010 to form United Continental Holdings Inc. Ever since the merger, people in the industry have assumed it was in danger of losing its hub status, because the airline now has United's Midwestern hub in Chicago.
"Ever since the merger everyone knew this was a risk, which is why economic development officials for the city, the region and the state have discussed options with United for keeping its presence in Cleveland," Ohio Gov. John Kasich said. "This is a disappointing decision and one we disagree with, but a point that United stressed is that demand for air travel from Cleveland remains strong and that they're maintaining virtually all of their flights to and from major markets."
In June, Delta Air Lines Inc. announced it would be closing its Memphis hub, which it had inherited in its 2008 acquisition of Northwest Airlines. Delta already has a huge hub operation in Atlanta.