Airlines braced for rough ride as profits tumble

Increased security and falling passenger numbers have hammered airlines' revenues Keystone

Airlines around the world are bracing themselves for a worsening financial crisis as they cut services and jobs in the aftermath of last Tuesday's attacks in New York and Washington.

United States airlines are seeking urgent meetings with the Bush administration this week in a bid to receive federal aid to keep their industry afloat.

Delta Airlines, the country’s third-largest carrier, on Sunday joined three other major US airlines in reducing scheduled services and said it would consider job cuts if the government did not provide a rescue aid package.

“Were this to go on for any extended time without aid from the government then we would have to consider employee reductions,” Delta chief executive Leo Mullin has said.

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

Facing bankruptcy

On Saturday, Continental Airlines said it would lay off 12,000 staff and warned it could file for bankruptcy if it didn’t receive help.

The company’s chief executive officer, Gordon Bethune, warned that as many as 100,000 airline jobs could be lost after the attacks on the World Trade Center and the Pentagon.

American Airlines, Northwest Airlines and United Airlines have also said they would cut their services by 20 per cent.

The crisis comes at a critical time for US airlines which are already struggling with an economic slump, high fuel costs and increased salaries. They now face added costs for increased security measures in the face of fewer passenger numbers.

Largest ever losses

Analysts expect airlines to make an annual loss of more than $4 billion (SFr6.41 billion) after they absorb the impact of last Tuesday’s attacks. However, executives have told members of Congress that they may lose as much as $10 to $12 billion this year – the industry’s largest ever losses.

In a related development, the worldwide flight reservation system Amadeus recorded a drop in ticket sales of 28 per cent last week. A communiqué said that between August 11 and 14, there were 1.6 million fewer bookings than at normal times. The US market was the hardest hit with a decline of 74 per cent.

The management of Amadeus said the 1.6 million bookings represented about 0.4 per cent of last year’s total ticket reservations

“This is certainly a very bad situation for all the world’s airlines and particularly for those serving the North Atlantic route,” Swiss aviation journalist Sepp Moser told swissinfo.

“They will lose traffic. They will lose efficiency because increased security will slow down the system, so they will be hurt in many ways,” he added.

Moser said he was not sure that the falling number of passengers after the attacks would lead to a long-term drop in passenger figures.

“Usually we have about a four to five per cent increase in growth in international air traffic. There may be a flat situation this year and reduced growth in the years to come but in the long term I don’t think the effects will be very dramatic,” he said.

“The healthy airlines will survive, particularly those which are members of a strong, global alliance now,” he added.