United, Delta to Cut Service

The airline industry retrenchment spread Sunday as the nation’s second- and third-biggest carriers, United and Delta, said they would slash flight service by 20%. With these announcements, all of the nation’s top five airlines now have disclosed they are planning cutbacks tied to the business fallout from Tuesday’s terrorist attacks.

Together, the cutbacks are widely expected to produce about 100,000 layoffs and to roil related travel businesses, including hotel chains and car rental companies.

Amid the growing crisis in the airline industry, Vice President Dick Cheney said on a TV interview program Sunday that the Bush administration would consider financial aid to the carriers. Some airline executives and analysts fear that, without a federal bailout, a number of struggling airlines soon will head to Bankruptcy Court to seek legal protection from creditors.

The latest developments followed disclosures that American Airlines, Continental Airlines and Northwest Airlines all plan to reduce their flight service by about 20%. Only Continental has indicated how many workers it plans to lay off--12,000, or 21% of its personnel--but other airlines are expected to reduce their work forces too.

“Airlines were in terrible shape before this all happened. This is just going to be devastating,” said Manny Pastreich, who directs union-organizing campaigns at airports for the national AFL-CIO.

“And there’s no doubt it will ripple through the economy,” Pastreich said. “Just as an example, 80% of all car rentals happen at airports. They’re experiencing a boom now, but that won’t last long.”

The word of longer-term cutbacks came as the major air carriers scrambled to resume many of the flights that were grounded after Tuesday’s attacks in New York and Washington. Among the top five carriers, Delta Air Lines appeared to have restored the most flights, saying it expected to offer about three-quarters of its usual 2,536 Sunday flights.

But Delta’s chief executive, Leo F. Mullin, referring to the drop in passenger bookings since Tuesday, told ABC-TV news, “Were this to go on for any extended time without aid from the government, then we would have to consider employee reductions.

“The airline industry cannot be the first casualty of this war,” Mullin added.

In a news release, Jim Goodwin, chief executive of United Airlines’ parent, UAL Corp., also called for government help. “The United States’ economy relies heavily on the stability of the air travel industry,” Goodwin said, adding that his company’s own financial security also was at stake.

On Friday, a $15-billion airline aid package was introduced in Congress that included a $2.5-billion cash bailout, but it failed. Lawmakers are in recess, so legislative action appears to be delayed until Thursday at the earliest.

But Cheney, speaking on NBC’s “Meet the Press,” signaled that the White House is willing to consider measures. He said Transportation Secretary Norman Mineta and President Bush’s chief economic advisor, Lawrence Lindsey, are exploring ways to help the industry.

“I think we’re very interested in finding ways to make certain that in this particular instance, there’s no sort of permanent damage, if you will, to our civil aviation capacity. It’s very important,” Cheney said.

Meanwhile, union officials said the nation’s No. 6 carrier, financially ailing US Airways Inc., also plans to cut service by 20% to 25%. Company spokesman Rick Schoen declined to comment directly on the report, saying only, “We’ve announced no changes to our service level.”

But analysts say US Airways already is in critical condition and might not be able to avoid a financial collapse if air travel fails to pick up. “They may already be in goodbye gear,” said Michael Boyd, an airline industry consultant in Evergreen, Colo.

Analysts said that’s because the carrier’s routes are centered in the Northeast, it already is among the industry’s weakest financially, and one of its big sources of income is Reagan National Airport in Washington, which remains closed.

Bucking the cutback trend was Southwest Airlines. The carrier said it flew 2,600 flights Sunday, its normal level of service. The Dallas-based airline also said it hopes to operate at its normal level today.

But many airlines are threatened with insolvency because they’re running out of cash, executives and analysts said. The industry is paying more than $340 million in daily costs, even as revenues plummet.

The sudden industry downturn is a blow to airline workers, many of whom won solid gains this year in negotiated union contracts, including a recent deal covering American Airlines flight attendants. However, many contracts were in negotiations as of Tuesday. And Delta’s 22,000 flight attendants, currently nonunion, were due to vote soon on joining the Assn. of Flight Attendants. The terrorist attacks put the election and all airline contract negotiations on hold.

In a letter e-mailed to members Sunday, the International Brotherhood of Teamsters said it suspended negotiations with Continental and Southwest on mechanics’ pay.

“We want to assure that your contractual rights are followed, and layoff notices are issued in accordance with your collective bargaining agreement,” the letters said. The Teamsters represents 41,000 airline industry workers, including mechanics, ramp workers and some pilots and flight attendants.

The Teamsters and other unions that represent airline workers are urging immediate federal assistance to keep the industry afloat, but with conditions that employees be retained whenever possible.

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Times staff writer Denise Gellene contributed to this report. Reports from Reuters also were used.