Airlines Plead for Quick Aid
The airline crisis deepened Saturday as two major carriers, Continental and Northwest, said they will slash their permanent flight schedules by 20% to survive. Continental also furloughed 12,000 employees, or 21% of its work force, and called on Congress for immediate help “to save our industry.”
Continental, citing a “drastic drop” in passenger bookings and the historic shutdown of U.S. airspace in the aftermath of the terrorist attacks, also warned along with industry analysts that one or more airlines could seek bankruptcy protection as early as this week if they don’t quickly get aid.
Industry observers said other airlines also will have to sharply reduce their schedules because of fewer passengers. Continental, the nation’s fifth-largest airline, estimated that the industry has lost $1 billion since Tuesday’s events and that industrywide furloughs and layoffs will total 100,000 as flights are reduced.
President Bush is concerned about the situation, White House spokesman Ari Fleischer said Saturday, though administration officials have not committed to backing any kind of bailout. Transportation Secretary Norman Mineta plans urgent meetings with airline executives this week to discuss the problems.
Analysts say US Airways is among the most susceptible to a bankruptcy filing. The carrier’s routes are centered in the Northeast, it’s already among the industry’s weakest financially, and one of its big sources of income is Reagan National Airport in Washington, which remains closed. Airline officials could not immediately be reached for comment.
But many airlines are threatened with insolvency because they’re running out of cash, executives and analysts said. While the industry has to keep paying more than $340 million in daily costs, their revenues have plummeted because the air traffic system not only was shut down but is only slowly and raggedly coming back to life. The airlines operated at only about 60% of their prior schedules Saturday.
“The patient is on the table clinging to life, and we need a transfusion and we need it now,” Continental Chairman Gordon Bethune told a news conference Saturday.
The outspoken Bethune also warned that if airlines start going under, it will cause incalculable damage to the economy, affecting companies and workers involved in building aircraft and jetliner equipment and supplies as well as the travel agents, hotels, rental-car agencies and theme parks that depend so heavily on air traffic, to name just a few sectors.
“We need Congress to intervene and save our industry,” he said.
Congress is trying to help--the House introduced a $15-billion aid package Friday night that includes a $2.5-billion cash bailout. But lawmakers are now in recess until Thursday and it’s doubtful they will take action until then.
“We can’t wait until Thursday,” Bethune said, noting that Continental is the first airline to reduce its long-term schedule and furlough workers. “We don’t want to disappear while everyone is sorting out what to do about it.”
The industry was in dire straits before the attacks. Most carriers already were losing money because of the weak economy and a sharp drop in business travel, the airlines’ main source of income. In the second quarter, only Continental and Southwest Airlines turned a profit.
The carriers are also hurting because of the new security restrictions mandated at U.S. airports, said independent airline analyst Michael Boyd. He said the new rules don’t help security much, yet are slowing airlines’ ability to quickly refill seats.
Northwest, the No. 4 airline, did not say how many layoffs would result from its schedule cuts. The airline expects to have the new schedule in place by Oct. 1.
United Airlines spokesman Chris Brathwaite said the No. 2 airline will not announce new flight schedules now, saying it is too busy dealing with families of victims who were on its two flights that crashed in the terrorist attacks.
The hijackers also used two American Airlines jets. In a recorded statement, American spokesman Gus Whitcomb said the airline is evaluating its staffing needs, noting that the airline set a previously announced goal of returning to 80% of its level before Tuesday’s events.
A spokeswoman for third-ranked Delta Air Lines said it expects to be running at 70% to 80% of its normal schedule Monday and that “layoffs are a last resort.”
Southwest, the king of low-fare airlines, was adamant Saturday in saying it has no plans to cut back.
Besides US Airways, America West Airlines--a smaller carrier based in Phoenix--is also thought to be among the weakest in terms of a cash crunch. Both airlines had their credit ratings cut Friday by Moody’s Investors Service.
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Times staff writers Peter Pae in Los Angeles, Lianne Hart in Houston and Greg Miller in Washington contributed to this story.
