U.S. airlines could slash 70,000 more jobs and annual losses would reach $10.7 billion if there is a war against Iraq, the biggest domestic carriers said Tuesday.
The Air Transport Assn., which represents major airlines, released the outlook in a report on industry finances and called again for government help with fuel costs and relief from taxes.
Shares of AMR Corp., the parent of American Airlines, dropped 34%, while Delta Air Lines Inc. fell 22%. Standard & Poor's said it would drop AMR from its flagship 500 index after the close of trading Thursday.
The airline group said a conflict with Iraq lasting 90 days would cost $4 billion in lost revenue, on top of the $6.7 billion the industry is expecting to lose this year.
The airlines said they would have to cut costs aggressively, resulting in 70,000 job losses on top of the 100,000 since Sept. 11, 2001.
"The nation's air carriers will continue to do all we can, but we fear that the consequences of this war will be severe," said James May, president and chief executive of the air transport group.
May said war could prompt more bankruptcy filings or force financially fragile carriers into liquidation. The industry is carrying more than $100 billion in debt with bond ratings for nine of the 10 biggest carriers rated "junk."
The airlines said they wanted relief from security taxes and fees and other government mandates they said have cost them $4 billion in lost revenue since the attacks. They also want the government to sell strategic oil stocks to reduce fuel prices.
President Bush was aware of the airlines' concerns, a White House spokesman said. But there was no promise of aid.
"We will, of course, continue to talk to the airlines about various issues," spokesman Ari Fleischer said.
Airline stocks, already down sharply this year, fell further.
AMR shares fell 82 cents to $1.59 on the New York Stock Exchange. Sources say American Airlines is seeking financing for a possible bankruptcy filing.
S&P; said it is dropping AMR from its 500 index because the airline's market capitalization and share price have sunk.
Delta Air Lines, which said Monday that it expected negative cash flow for the first quarter because of low bookings, fell $1.91 to $6.75 on the NYSE.
Northwest Airlines Corp. fell 74 cents, or 10.57%, to $6.26 on Nasdaq.
Ray Neidl, an airline analyst at Blaylock & Partners, said the current situation was "the perfect economic storm" of converging factors, including high labor costs. "The result is an unprecedented decline in demand that seems difficult to address," he said.
The U.S. government doled out $5 billion in cash aid and set up a $10-billion loan guarantee program to help airlines after the Sept. 11 attacks. May said the industry did not support such remedies this time.