G-khan
03-22-2003, 08:31 AM
By Lynne Marek
Chicago, March 21 (Bloomberg) -- UAL Corp.'s United Airlines, the world's second-biggest airline, and Northwest Airlines Corp., No. 4 in the U.S., are taking more than 8,000 workers off the job and scaling back flights as war in Iraq saps demand for air travel.
United Airlines, which filed the largest airline bankruptcy last year, said it will trim 8 percent of flight capacity, and its unions said the company wants to place 3,448 mechanics and flight attendants on temporary leave. Northwest will cut 4,900 jobs, or 11 percent of its workforce, and reduce capacity 12 percent.
``Passengers cut back on international travel in general and certainly U.S. citizens have greater concerns than others regarding travel and terrorist concerns,'' said Standard & Poor's analysts Philip Baggaley earlier this week.
Airlines are trying to reduce costs to survive as war pushes down ticket sales, exacerbating a two-year air travel slump that has led to record losses. Hawaiian Airlines and the Colombian carrier Aerovias Nacionales de Colombia SA today followed United and US Airways Group Inc. into bankruptcy.
AMR Corp.'s American Airlines, the world's largest airline, said yesterday that it will reduce flight capacity on international routes by 6 percent as an ``initial response'' to the war, noting that it didn't know what impact the reduction would have on its workforce.
Continental Airlines Inc., the No. 5 U.S. carrier, said earlier this week that it would eliminate 1,200 jobs by yearend to help save money.
Delta May be Next
Delta Air Lines Inc., the third-largest U.S. airline and the American carrier with the most flights to Europe, is likely to announce that it's scaling back service soon, said Fitch Ratings analyst Bill Warlick. Trans-Atlantic flights have been hardest hit by the downturn, he said.
Two days into the U.S.-led war in Iraq, investors are optimistic that the conflict will be short. U.S. airline shares rose on expectations that prices for jet fuel, the airlines' second- biggest expense, will slide back after rising as war approached. The Bloomberg U.S. Airline Index rose 10 percent.
``It's a combination of things that are going on in Iraq and internal developments in the industry,'' said Jon Ash, managing director of Global Aviation Associates. ``Fuel costs are dropping, and dropping steadily and oil traders are confident that we'll have control of the oil fields.''
United
In the meantime, United is asking 468 mechanics to take leave by March 25 and 680 more on April 15, the International Association of Machinists said in a message to its members. United also asked 2,300 flight attendants to take 30-day leaves without pay for April, the carrier's Association of Flight Attendants union said.
The airline filed for Chapter 11 bankruptcy protection in December and has been trying to cut costs, especially labor expenses, to stem losses. United, which has 72,500 employees, said earlier this week that the war has decreased international bookings by 40 percent from last year.
``There will be capacity reductions -- what they are is still in the development stage,'' said United Chief Financial Officer Jake Brace, while on a break from a bankruptcy-court hearing today.
The airline will remove seven Boeing 737s, 10 Boeing 757s and four 777s from its active fleet on April 1, according to the Machinists union.
The mechanics being sent home, all at a maintenance facility in Indianapolis, would return between June 15 and Aug. 15 and won't be paid while they're off, the union said. United also told its pilots union their schedules for April will have to be scaled back.
Northwest
Northwest flight schedule changes will affect North America, Asia and Europe, Northwest said in a statement. As part of the capacity reduction, the airline will take 20 DC9s, Airbus A320s, Boeing 757s, DC10-30s and Boeing 747s out of service.
The airline Northwest has now cut 17,000 jobs since the Sept. 11 attacks. St. Paul, Minnesota-based Northwest currently has 44,000 workers. The company said it will make the job cuts through layoffs, attrition and voluntary leaves.
``The last two years have been a difficult and painful period for our employees,'' Northwest Chief Executive Richard Anderson said in a statement.
Both United and Northwest are likely to try to lower the frequency of flights on various routes, as opposed to eliminating service altogether, said Fitch Ratings analyst Bill Warlick.
``They're trying to essentially rebalance supply and demand, recognizing that if they left capacity unchanged they'd be flying consistently low loads on a lot of these routes,'' Warlick said.
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APnughBR9VW5pdGVk
Chicago, March 21 (Bloomberg) -- UAL Corp.'s United Airlines, the world's second-biggest airline, and Northwest Airlines Corp., No. 4 in the U.S., are taking more than 8,000 workers off the job and scaling back flights as war in Iraq saps demand for air travel.
United Airlines, which filed the largest airline bankruptcy last year, said it will trim 8 percent of flight capacity, and its unions said the company wants to place 3,448 mechanics and flight attendants on temporary leave. Northwest will cut 4,900 jobs, or 11 percent of its workforce, and reduce capacity 12 percent.
``Passengers cut back on international travel in general and certainly U.S. citizens have greater concerns than others regarding travel and terrorist concerns,'' said Standard & Poor's analysts Philip Baggaley earlier this week.
Airlines are trying to reduce costs to survive as war pushes down ticket sales, exacerbating a two-year air travel slump that has led to record losses. Hawaiian Airlines and the Colombian carrier Aerovias Nacionales de Colombia SA today followed United and US Airways Group Inc. into bankruptcy.
AMR Corp.'s American Airlines, the world's largest airline, said yesterday that it will reduce flight capacity on international routes by 6 percent as an ``initial response'' to the war, noting that it didn't know what impact the reduction would have on its workforce.
Continental Airlines Inc., the No. 5 U.S. carrier, said earlier this week that it would eliminate 1,200 jobs by yearend to help save money.
Delta May be Next
Delta Air Lines Inc., the third-largest U.S. airline and the American carrier with the most flights to Europe, is likely to announce that it's scaling back service soon, said Fitch Ratings analyst Bill Warlick. Trans-Atlantic flights have been hardest hit by the downturn, he said.
Two days into the U.S.-led war in Iraq, investors are optimistic that the conflict will be short. U.S. airline shares rose on expectations that prices for jet fuel, the airlines' second- biggest expense, will slide back after rising as war approached. The Bloomberg U.S. Airline Index rose 10 percent.
``It's a combination of things that are going on in Iraq and internal developments in the industry,'' said Jon Ash, managing director of Global Aviation Associates. ``Fuel costs are dropping, and dropping steadily and oil traders are confident that we'll have control of the oil fields.''
United
In the meantime, United is asking 468 mechanics to take leave by March 25 and 680 more on April 15, the International Association of Machinists said in a message to its members. United also asked 2,300 flight attendants to take 30-day leaves without pay for April, the carrier's Association of Flight Attendants union said.
The airline filed for Chapter 11 bankruptcy protection in December and has been trying to cut costs, especially labor expenses, to stem losses. United, which has 72,500 employees, said earlier this week that the war has decreased international bookings by 40 percent from last year.
``There will be capacity reductions -- what they are is still in the development stage,'' said United Chief Financial Officer Jake Brace, while on a break from a bankruptcy-court hearing today.
The airline will remove seven Boeing 737s, 10 Boeing 757s and four 777s from its active fleet on April 1, according to the Machinists union.
The mechanics being sent home, all at a maintenance facility in Indianapolis, would return between June 15 and Aug. 15 and won't be paid while they're off, the union said. United also told its pilots union their schedules for April will have to be scaled back.
Northwest
Northwest flight schedule changes will affect North America, Asia and Europe, Northwest said in a statement. As part of the capacity reduction, the airline will take 20 DC9s, Airbus A320s, Boeing 757s, DC10-30s and Boeing 747s out of service.
The airline Northwest has now cut 17,000 jobs since the Sept. 11 attacks. St. Paul, Minnesota-based Northwest currently has 44,000 workers. The company said it will make the job cuts through layoffs, attrition and voluntary leaves.
``The last two years have been a difficult and painful period for our employees,'' Northwest Chief Executive Richard Anderson said in a statement.
Both United and Northwest are likely to try to lower the frequency of flights on various routes, as opposed to eliminating service altogether, said Fitch Ratings analyst Bill Warlick.
``They're trying to essentially rebalance supply and demand, recognizing that if they left capacity unchanged they'd be flying consistently low loads on a lot of these routes,'' Warlick said.
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APnughBR9VW5pdGVk