NEW YORK (CNN/Money) - Continental Airlines became the third major carrier this month to announce deep cuts in its schedule and plans to further reduce employment due to continued weak demand for air travel.

Houston-based Continental (CAL: up $0.77 to $9.14, Research, Estimates) plans a further 6 percent cut in capacity by next August, bringing the total capacity reduction since the Sept. 11 terrorist attack to about 17 percent. Overall jet capacity in 2003 will be about 4 percent below this year's, but some of the cuts will take place before the end of the year as the airline grounds 11 additional MD-80 jets in addition to the 49 already grounded since Sept. 11.

Continental did not provide details on new staffing levels but said it hopes to handle reductions through retirements, attrition and voluntary departures rather than involuntary furloughs. Continental was the first major airline to announce staff cuts following Sept. 11.

The company estimates the most recent moves should save it $80 million through the remainder of this year and $350 million a year after that.

The plan by the nation's No. 5 airline follows similar actions at No. 1 American Airlines and No. 2 United Airlines. American, a unit of AMR Corp. (AMR: down $0.04 to $9.22, Research, Estimates), said it will cut 7,000 employees, or about 6 percent, by next March and reduce its schedule by 9 percent.

United, owned by UAL Corp. (UAL: down $0.03 to $3.26, Research, Estimates), did not provide details of its planned cuts, but said it may be forced to file for bankruptcy court protection later this year. US Airways Group Inc. (U: Research, Estimates), the nation's No. 7 carrier, already has filed for bankruptcy court protection under Chapter 11, which allows it to continue flying.

Related stories       United flying towards bankruptcy American to fly leaner US Air files for bankruptcy

Continental did not portray its financial situation in such dire terms, but said it must make the changes to stem the losses it has had since the Sept. 11 terrorist attack. Continental was one of two major carriers, along with Southwest Airlines (LUV: up $0.13 to $13.28, Research, Estimates), that was profitable before the attack.

"These initiatives are a necessary response to the dramatic changes in the marketplace, including continued deterioration of revenue and rising fuel, insurance and security costs," the company said.

While Continental flights operated at 79.4 percent of capacity in July, up from 78.2 percent a year earlier, average fares paid by passengers were significantly lower due to weak overall demand, leading to continued losses.