It must have been a kick in the gut to airline employees still mourning lost colleagues. Just eight days after United and American Airlines jets were hijacked, both airliners announced they were laying off 20,000 employees each.
These cuts bring the total of eliminated airline jobs to about 86,000. Early this week, Boeing, the No. 1 maker of passenger jets, announced 30,000 workers would lose their jobs by the end of 2002. Then, on Thursday, British Airways slashed 7,000 positions. A number of smaller carriers had also wielded their axes since the attacks.
"The entire industry is being severely affected by the consequences of September 11…that have added to the tragic events of the day and put the financial health of our industry in jeopardy," said James A. Goodwin, United's chairman and CEO, in a statement.
The layoffs amount to about 20% of United's staff. The Elk Grove, IL-based company has also reduced its flight schedule by 20% in the wake of the tragedy to 1,900 daily flights.
United was expected to lose $1 billion this year already. Now, analysts said it may lose that much in the second half of the year alone.
Calling the task at hand "heartbreaking," American Airlines chairman and CEO, said in a letter to employees, "I have declared a state of emergency at American Airlines. This declaration is an official declaration that…our company's very survival depends on dramatic change to our operations, our schedule and worst of all, staffing levels."
About 14% of AMR Corp.'s 138,350 employees at American, TWA and American Eagle were cut. The company headquarters is in Fort Worth, Texas.
Like other industries struggling in a tough economy, the airline sector was already in trouble when the terrorist attacks dealt another terrible blow. Last week, Midway Airlines realized it could not sustain the financial effects of the tragedy and shut down.
Analysts said the U.S. Carriers were on track to lose $2 billion in 2001, according to published reports. Now, the industry may lose $5 billion.
One reason was that companies had reduced corporate spending, which composes 50% to 70% of airline revenues, as a way to save money. Airlines also complained about the high cost of labor and fuel.
The airlines, CRM pioneers with the invention of their frequent flyer programs, are reportedly doing no marketing at the moment. The exception is travel advisories having to do with safety and schedules relating to the terror attacks. "We're just trying to get the airplanes up and get them up safely," said an American Airlines spokesperson.
The White House has asked Congress to approve an $8 billion plan to stabilize the airline industry. Airlines had asked for $12.5 billion in loan guarantees.
