Monday, May 18, 2009

3 Major Airlines Slice Schedules

By BRAD FOSS AP Business Writer NEW YORK (AP) _

Airlines are cutting back service dramatically to avoid bankruptcy after the terrorist attacks, with three major carriers reducing their schedules by 20 percent and one of them---Continental---laying off 12,000 employees.

American and Northwest did not specify how many jobs would be affected by their reduction in service.

The cutbacks at Continental, the nation's fifth-largest airline, represent one-fifth of its workforce of 56,000.

"These actions are a direct result of the current and anticipated adverse effects on the demand for air travel caused by this week's terrorist attacks on the United States and the operational and financial costs of dramatically increased security requirements," the Houston-based carrier said in a statement Saturday.

Continental chairman and chief executive Gordon Bethune would not say when, if ever, the employees might be called back to work.

Bethune said that the airline has been losing $30 million a day since the attacks and that only 55 percent of its planes are back in the air _ most of them half-empty.

"We're taking immediate steps to preserve all the cash we had going into this debacle," he said. "We are doing this in survival mode."

Even before the World Trade Center and the Pentagon were hit by hijacked airliners, analysts predicted the industry would see huge losses because of the downturn in the economy.

But the figure has now ballooned to between $4 billion to $7 billion because of a drop in bookings caused by a fear of flying; the shutdown in air travel over the past few days; and the fewer flights and higher costs associated with the tight new airport security measures.

Without a huge bailout from the government, analysts say bankruptcy is imminent for even the largest airlines.

"The airlines simply won't be able to do what they're being asked to do without financial support," said Helane Becker, an analyst at Buckingham Research in New York.

Congress on Saturday said it would give President Bush $40 billion to help rebuild from last week's terrorist attacks. The administration has not yet endorsed the package and gave no indication how much might money it might allocate to airlines.

White House spokeswoman Claire Buchan said the administration has already been in touch with the airlines and Transportation Secretary Norman Mineta plans to meet soon with industry executives to discuss their financial and security concerns.

The nation's nine largest airlines have been losing between $100 million and $250 million daily since the nation's air space was shut down and then gradually reopened following Tuesday's disaster.

American, the nation's largest airline, was the first to announce scaled-back service, on Friday. United and Delta, respectively the second- and third-largest airlines, have not said whether they, too, will cut back. Northwest, the No. 4 airline, said it will complete a review by next week.

Also Saturday, Boston's Logan Airport, where hijackers boarded the planes that destroyed the Trade Center, reopened to tightened security. Travel at other airports continued to creep back into service.

Reagan National Airport at Washington remained the only major U.S. airport still closed to travel. Federal authorities said its proximity to the Pentagon and other federal buildings made it a security risk.

Midway Airlines closed down Wednesday while in the midst of reorganizing its financially-troubled business, saying recent events dashed any hope for a recovery. The North Carolina-based company laid off 1,700 employees.

No comments: