In aftermath of terrorist attacks, layoffs among U.S. airlines climbs to 70,000

Posted: Thursday, September 20, 2001

NEW YORK (AP) -- The avalanche of U.S. airline job cuts has more than doubled to 70,000 as carriers, hit by airport shutdowns and dwindling demand, slash payrolls in anticipation of multibillion-dollar losses.

The latest round of cuts came Wednesday, when the parent companies of American and United each announced layoffs of 20,000. A day earlier, Boeing said it planned to trim thousands of jobs in its commercial airlines division.

''We simply have no choice but to step up to the realities of this extraordinarily critical time,'' said James E. Goodwin, United's chairman and chief executive officer.

The layoffs amount to about 14 percent of AMR Corp.'s 138,350 workers at American, TWA and American Eagle, and about 20 percent of United's work force.

American Airlines Chairman Donald Carty said the company was in a state of emergency.

''This declaration is an official recognition that -- hard as it may be to accept -- our company's very survival depends on dramatic change to our operations, our schedule, and worst of all our staffing levels,'' he told employees.

The only major carriers that haven't announced layoffs in the past week are Delta, Northwest and Southwest.

Airline executives warn the layoffs could rise to 100,000, and are asking for $17.5 billion in federal aid to keep them from ruin.

It's not just the airlines that are in trouble: Boeing, the No. 1 maker of passenger jets, said Tuesday it will scale back deliveries and lay off up to 30,000 of its 93,000 commercial airline workers by the end of next year.

For the year, according to analysts, the U.S. airline industry's losses will exceed $5 billion due to last week's two-day shutdown of the nation's air space, fewer business travelers and new security measures mandated by the federal government.

With talk of a recession growing, stock markets suffering and the president declaring a ''war'' on terrorism, carriers have scaled back schedules by 20 percent on the assumption that passenger volumes will be much lower.

But even before the hijacked jets slammed into the World Trade Center and Pentagon last week, analysts said U.S. carriers were on pace to lose about $2 billion in 2001.

Corporate spending, which accounts for between 50 percent and 70 percent of airline industry revenues, plunged in 2001 as companies cut back on travel in response to the nation's economic malaise. Airlines also blamed the high costs of labor and fuel.

Last week's terrorist attacks dashed hope for a comeback anytime soon and airline executives have warned bankruptcies are imminent for some carriers without emergency financing from the government.

''The financial damage is and continues to be devastating,'' Delta Air Lines Chairman Leo Mullin told the House Transportation Committee on Wednesday.

United, based in Elk Grove, Ill., has been harder hit by the disaster than other carriers. Not only were two of its flights involved, but it relies more than others on revenue from business travel.

United had been on pace to lose about $1 billion this year due to the economic downturn and steep labor costs; analysts now say it could lose that much in the second half of the year alone. Its stock has plummeted 39 percent this week.

Lawmakers, citing the aviation industry's importance to the nation's economy, appeared ready to move as early as this week on relief legislation. However, several lawmakers said any package should include help for the laid-off workers.

Continental and US Airways laid off a combined 23,000 employees earlier in the week, and Midway Airlines shut down. America West, American Trans Air, National Airlines and Britain's Virgin Atlantic also announced cuts.

On Thursday, British Airways PLC joined that list, saying it will cut 7,000 jobs and reduce operations by 10 percent in anticipation of an expected loss of business. The airline, which employs 58,000 people, had previously been bruised by no-frills airlines offering cut-rate European flights and tougher competition on trans-Atlantic routes.

Airline stocks have plummeted since U.S. markets reopened Monday, carrying down with them the shares of aircraft manufacturers, online travel agencies and ticket distribution firms.

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