United Airlines parent, UAL, on Tuesday posted a steep quarterly loss on high fuel prices and said it would eliminate nearly 13 percent of its work force as part of a major downsizing.

The job cuts as well as a new target for capacity reductions are consistent with a trend among US airlines to shrink their businesses in hopes of offsetting their fuel bills. Jet fuel prices have risen alongside crude oil, which touched a record high above USD$147 a barrel this month.

"Our industry is challenged as never before by the unrelenting price of oil, and United is taking aggressive action to offset unprecedented fuel costs and to strengthen the competitiveness of our business," Glenn Tilton, UAL chief executive, said in a statement.

UAL said it will reduce is fourth-quarter mainline domestic capacity by up to 16.5 percent, retire its entire Boeing 737 fleet and six Boeing 747s, and reduce its work force by 7,000 jobs by the end of 2009. All the major US airlines have unveiled similar capacity cuts.

UAL said its second-quarter net loss amounted to USD$2.73 billion, compared with profit of USD$274 million a year earlier.

UAL took a USD$2.6 billion charge against second-quarter earnings, including a USD$2.3 billion write-down for the impairment of goodwill. Other airlines, such as US Airways, also have taken hefty charges related to the writing off of goodwill.

UAL said operating revenue increased by 3 percent in the quarter to USD$5.37 billion. The company paid USD$1.85 billion for fuel, an increase of 53.2 percent.

The company ended the quarter with an unrestricted cash balance of USD$2.9 billion and a restricted cash balance of USD$655 million.