US aviation woes deepen, spreads globally

Published September 20th, 2001 - 02:00 GMT

The terror-driven crisis in the US aviation industry deepened and spread worldwide Wednesday, September 19, as President George W. Bush prepared a multibillion-dollar rescue package. 


American Airlines, the world's biggest carrier, announced 20,000 job cuts, bringing the total for US airlines and plane maker Boeing to more than 70,000 since the September 11 suicide strikes. 


The House of Representatives is to introduce a law Thursday to give $2.5-$5.0 billion in emergency payments to US carriers and an as-yet-undecided sum in loan guarantees, said Republican Tom DeLay.  


If the Senate moved quickly enough, the legislation would be on Bush's desk for his signature by the end of the weekend, he told a news conference in Houston, Texas. "We have to do this. These airlines are losing a tremendous amount of money every day." 


Delta Air Lines chairman Leo Mullin called for $17.5 billion in financial assistance: five billion dollars in cash and $12.5 billion in loan guarantees. The airlines' expected cash position for June 30, 2002 had turned from a surplus of $8.5 billion to a deficit of $15.5 billion, he told Congress. 


Mullin asked the lawmakers to protect the industry from liability lawsuits. But some lawmakers had reservations. "I do not support signing a blank cheque," said Democrat Robert Menendez. "Sacrifices must be made by all." 


Airlines are suffering as the attacks frighten away passengers and force them to undertake burdensome security measures, which reduce the maximum number of flights. As the damage rippled out from the airline industry to hotels, tourism and the rest of the economy, Bush was leaning towards unleashing an economic stimulus package, his spokesman Air Fleischer said. 


Taxes would not be raised to pay for any stimulus, he added, noting that the United States had a very large surplus. The Congressional Budget Office has predicted a surplus of $153 billion for this year. 


The US woes were felt worldwide. Swissair's board met to discuss its finances as its shares slid 40 percent. Dutch carrier KLM cut back its North American and Middle Eastern schedules by five percent. Lufthansa, which employs 70,000 people worldwide, said it was considering reducing its workforce through natural attrition while delaying orders for 15 Airbus A380 super-jumbos and four Boeing 747-400s. 


In Australia, the government warned that the tourism industry's earnings this year would be cut $2.5 billion because of the attacks and the collapse of the domestic Ansett Airlines. French Transport Minister Jean-Claude Gayssot said Tuesday he would welcome measures throughout Europe to protect airlines as he called a meeting with Air France, AOM/Air Liberte and Air Littoral. 


Britain's Virgin Atlantic said Monday it was slashing capacity across the North Atlantic and axing 1,200 jobs — one seventh of its workforce — as a result of the terrorist attacks. In the United States, workers were counting the cost of the attacks with their jobs. 


American Airlines said no alternatives were being offered to the 20,000 fired employees because of its cash crunch. "This is, without a doubt, the most difficult thing I have had to do in my two decades at American," chairman and chief executive Don Carty said in a letter to employees.  


Boeing announced late Tuesday it was sacking 20,000 to 30,000 people. Continental Airlines has already said it is letting go of 12,000 staff, and US Airways is cutting 11,000. United Airlines is reportedly examining 20,000 job cuts. 


"Job losses in the air transport industry can easily exceed 100,000," The International Brotherhood of Teamsters chief James Hoffa told the House committee on transportation and infrastructure. "The layoff of thousands of workers undermines consumer confidence and accelerates the downward trend of our nation's overall economy," he said, calling for financial relief for workers. 


Boeing shares fell 53 cents, or 1.60 percent, to $32.61. The AMR parent of American Airlines was flat at $20.00 while United Airlines eased 23 cents, or 1.21 percent, to $18.76. The two leading US airlines lost two aircraft each in the hijackings. 


Continental dropped 26 cents, or 1.47 percent, to $17.46, US Airways fell 16 cents, or 2.75 percent, to $5.65, and Northwest declined 84 cents, or 6.51 percent, to $12.07. Delta rose 73 cents, or 3.18 percent, to $23.66. ― (AFP, Washington) 


by David Williams 


© Agence France Presse 2001

© 2001 Mena Report (

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