Continental lays off 12,000 staf in Airline crisis
( 2001-09-16 10:25 ) (7 )

Continental Airlines Inc. said on Saturday it was laying off 12,000 staff and warned it may have to file for bankruptcy protection as the world's fifth-largest carrier and rival Northwest Airlines Corp. slashed flight schedules in the fallout from the air attacks on the World Trade Center and the Pentagon.

The industry's deepening crisis led Gordon Bethune, the chief executive of the Houston, Texas-based Continental, to predict 100,000 airline job losses worldwide and prompted the Bush administration to announce it would hold urgent talks with carriers about their financial woes next week.

Tuesday's devastating air attacks, which have left thousands entombed in the rubble of the World Trade Center's twin towers, shut down the nation's aviation industry for almost three days and has prompted Americans to sharply curtail travel plans. The airline business, which will now also have to increase spending on security measures, was already reeling because of the economic downturn, surging labor costs and high fuel prices.

``The US airline industry is in an unprecedented financial crisis,'' said Bethune in a statement. ``Our industry needs immediate Congressional action if the nation's air transportation system is to survive.''

The layoffs announced by Continental, which represent 21 percent of its more than 56,000 staff, are likely to be followed by job cuts elsewhere. Minneapolis-based Northwest, which is the fourth ranking carrier in the world and has 53,000 employees, said it would review its overall staffing needs by next week and bring in long-term scheduling cuts, which like Continental represent about 20 percent of flights, by Oct. 1.

Among other major US airlines, the world's largest AMR Corp.'s American Airlines said it was reviewing staffing, and the third largest Delta Air Lines Inc. said it could not rule out layoffs, though a spokeswoman said they would be a last resort. No. 2 US carrier, UAL Corp., declined to comment on staffing levels.

The Geneva-based International Air Transport Association, which has 266 member airlines, has estimated that this week's immediate revenue losses and extra costs for the industry could be US$10 billion.

White House spokesman Ari Fleischer said on Saturday that President Bush was ``concerned'' about the financial problems facing commercial carriers in the wake of Tuesday's attacks -- which used hijacked planes from American Airlines and United Airlines.

White House spokeswoman Claire Buchan said that Transportation Secretary Norman Mineta would meet with airline executives as early as Monday.

``The airlines were facing serious problems before these incidents and now they're facing problems not of their own making. So we're obviously pretty sympathetic to that and looking at it very closely,'' Buchan said.

Several top-ranking members of the House of Representatives are pressing for passage of legislation authorizing US$2.5 billion in grants and US$12.5 billion in loan guarantees to aid all US airlines that have sustained losses, not just the two that lost a total of four planes in the hijackings.

But so far the White House has balked at endorsing the aid package, which supporters say would help mitigate the industry's losses and send a signal to financial markets reopening next week that Congress would try to cushion the economic effects of the devastating assaults.

Separately, James Hoffa, president of the largest union of transportation workers in North America, has requested a meeting with Bush to ``ensure the stability of the nation's air transportation system,'' the Teamsters said in a statement on Saturday.

Continental's Bethune said the industry had lost an additional $1 billion on top of substantial, earlier 2001 losses as flights were grounded nationwide.

Continental itself was losing US$30 million per day and could be forced to file for bankruptcy by late October if Congress did not quickly provide aid, he warned.

``It's a sad day for us,'' he said.

Continental, which forecast a 50 percent drop in travel demand, was one of only two major carriers that had been expected to post profits in 2001 prior to the air attacks.

Air traffic remained spotty within and outside of the United States on Saturday as airlines throughout the world slowly ramped up service four days after the attacks in New York and Washington grounded all US flights, and led to stepped up security measures around the globe. The major carriers were aiming to have roughly 50 percent of their scheduled planes in the air.

FLIGHT SCHEDULES STILL HOBBLED

Security at airports around the globe remained tight as stranded Americans, some grieving for loved ones, lined up to head home. The resumption of flights was hampered by stepped up safety measures in the United States and elsewhere.

The Federal Aviation Administration instituted a host of stop-gap safety measures in the US earlier this week, including the elimination of curb-side luggage check-in and prohibiting unticketed passengers beyond security checkpoints.

In the US and elsewhere, passengers were prevented from carrying even nail files, scissors or pocket knives on board. Others removed the metal cutlery from first class, replacing it with plastic.

``I just want to go home,'' New Yorker Peter Strastny said at Vienna airport. His apartment was just a few blocks from the World Trade Center, which was destroyed by two of the four hijacked jets.

Most large US airports were open, including the world's busiest, Hartsfield International in Atlanta, O'Hare in Chicago and Logan Airport in Boston, which had been closed Friday. Washington National, which sits near the Pentagon and the White House outside the US Capitol, remained closed.

In the US, travelers were advised to check in for their flights at least two hours prior to departure, while in Europe the standard two-hour check-in was raised to three hours.

In Europe and Asia, long lines were seen as many US-bound flights resumed after Friday's reopening of US airspace. Security checks stretched for up to three hours and airlines struggled to clear passenger backlogs.

``If it's necessary, we've just got to cooperate,'' said a patient American vacationer waiting for a seat at London's Heathrow, Europe's busiest airport. ``It's all very orderly.''

But Continental's Bethune said the new restrictions mean that passengers are changing the way they look at air travel.

The airline has seen a ``drastic'' drop in bookings in the past four days, he said. ``Behavior is changing in front of our eyes,'' he said.