War in Iraq Could Cost Airlines $10 Billion

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WASHINGTON, March 23 (UPI) — Few industries worldwide have suffered as much as the airline sector in recent years and now the war in Iraq comes at a time when the airlines have accumulated $30 billion in losses since the Sept. 11, 2001, terrorist attacks.

The armed conflict, which is in its fourth day, could easily add $10 billion in losses to the world’s airlines by extending the current travel decline well into the summer, according to the International Air Transport Association.


“The present armed conflict will only worsen these losses,” said Giovanni Bisignani, the IATA’s director general and chief executive officer.

In a speech late Saturday to the International Civil Aviation Organization in Montreal, Bisignani said, “At this point, the air transport industry must look beyond the horizon and re-invent itself.”

In its forecast of the impact of the war on the industry, the association said it expects international passenger travel to drop 15 percent to 20 percent during the war, depending on the region of the world.

Since the terrorist attacks in the United States, major U.S. carriers have laid off 100,000 employees and lost an estimated $19 billion. Continued weakness in passenger traffic and reductions in ticket prices have resulted in bankruptcy filings by US Airways, United Airlines and Hawaiian Airlines.

A number of the nation’s major airlines have begun taking additional emergency measures in an attempt to stem further losses.

On Friday, Northwest Airlines announced plans to cut 4,900 jobs and reduce its flight schedule by 12 percent. United Airlines said it would cut its schedule by about 8 percent and lay off an undermined number of workers.

Greg Taylor, United’s senior vice president for planning, said the schedule and job cuts were due to the continuing effects on future bookings because of the military conflict in Iraq. The airline expects bookings to continue to decline as the war continues, he said.

American Airlines said it would cut international flights by 6 percent in April to meet a downturn in travel bookings due to the war in Iraq. Based in Fort Worth, Texas, the airline said it could make additional reductions if traffic remains slow.

Northwest, which also plans to idle 20 planes, has already laid off about 12,000 employees due to the slump in the airline industry. The airline said it would continue to monitor passenger demand and did not rule out further job cuts or flight reductions.

“Due to weak demand for business travel which emerged in March 2001, the subsequent impact of the terrorist attacks on the United States in September of that year, and now, armed conflict with Iraq, we have been forced to reduce our workforce by some 17,000 employee positions,” said Richard Anderson, Northwest’s chief executive officer in a statement.

The St. Paul, Minn.,-based airline said the reductions will be made through attrition, voluntary leaves, leaving open positions unfilled and layoffs.

Hawaiian Airlines, a subsidiary of Hawaiian Holdings Inc., filed for Chapter 11 bankruptcy protection Friday “to restore the company’s long-term financial health.”

No new layoffs of Hawaiian’s 3,311 employees were planned.

John W. Adams, chairman and chief executive officer of Hawaiian Airlines, said the company had made since it launched its restructuring efforts several months ago in response to the dramatically changed, operating environment since September 2001.

The airline said flight and services would continue without interruption. The parent company was not included in the bankruptcy filing.

On Wednesday, Continental Airlines announced it would reduce its workforce by 1,200 employees by the end of the year, as part of initiative to save $500 million annually.

The airline said the cut would include 125 pilots, 500 reservation agents, 350 airport agents and 225 other employees.

“We need $500 million in annual cost savings and revenue generation to permit us to be a survivor during the worst financial crisis in aviation history,” said Gordon Bethune, chairman and CEO of Continental.

Bethune cautioned that additional reductions could be announced if the war in Iraq is prolonged, or if other events further degrade revenue or increase costs.

Copyright 2003 by United Press International. All rights reserved.