UAL Corp has reported a loss of $1.3 billion during the fourth quarter. The company has been hit by operating losses and fuel price hedging. The company plans lay- offs to reduce costs. About 2000 of its salaried employees might lose jobs in the coming days.

One of the reasons of the losses the company has suffered is on account of a decline in traffic as consumers and business travelers due to the weakening economy are flying less. According to the company spokesman, some of these cuts have already been executed.

UAL apprehends a "double-digit" decline in sales of first- and business-class seats on international flights. These were the chief source of profit to the company. Due to the global economic crisis, more business class travelers are opting economy cabin, said John Tague, United's executive vice president and chief operating officer.

UAL shares fell 6 percent, to $10.91.

The struggling airline industry has been cutting capacity over the last year to cope with soaring fuel prices. And as airlines reduce capacity, there is less demand for employees, noted Ray Neidl, airline analyst for Calyon Securities.

But the reduction in oil prices has given some relief to the airlines industry. "The reduction in oil prices and jet fuel prices has been a welcome benefit to the airlines but the floor has fallen out of air travel," said Harlan Platt, a finance professor and airline expert at Northeastern University College of Business Administration.