Major airlines cut back to avoid bankruptcy; Continental releases 12,000 employees
Saturday, September 15th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Airlines cut back service dramatically Saturday to try to avoid bankruptcy after the terrorist attacks, with three major carriers reducing their schedules by 20 percent and one of them _ Continental _ releasing 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.
Continental chairman and chief executive Gordon 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,'' Bethune 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 gave President Bush $40 billion to help rebuild from the terrorist attacks. It was unclear how much of that might be allocated for the airline industry.
The Teamsters union is working with airlines officials to set up a meeting with Bush to pursue an emergency appropriations package for the airlines.
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, which is based in Fort Worth, Texas, was the first airline to announce scaled-back service. Northwest, the fourth-largest airline, said it will complete a review of its staffing needs by next week.