Fri, Sep 21, 2001 page21

• British Airways to cut 7,000 jobs

  AIRLINES After last week's terrorist attacks, airlines all over the world are seeing losses, but British carriers seem to be taking the hardest hits

  • BLOOMBERG
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  British Airways, Europe's No. 1 airline, will slash its workforce by 7,000 jobs, or 12.5 percent, and cut the number of flights by 10 percent following last week's attacks in the US, which have reduced demand for air travel.

  British Airways said it's also retiring 20 jetliners from its fleet -- 10 long-haul planes, including its oldest Boeing Co 747s, and 10 short-haul aircraft, including six Boeing 767 wide-body aircraft. The job cuts include 1,800 firings announced two weeks ago, it said. Schedule changes will be announced later.

  "We face exceptional conditions which have forced us to take very tough decisions," Chief Executive Rod Eddington said in a statement. `"The tragic events in the US will undoubtedly have a significant impact on the demand for air travel in the months ahead."

  Airlines are shrinking their operations as people avoid traveling and planes fly empty. British Airways' biggest UK rival Virgin Atlantic Airways Ltd is laying off 1,200 people as demand falls on key trans-Atlantic routes, while Deutsche Lufthansa AG, Europe's No. 2 carrier, said it needs "immense efforts" to avoid a loss and is retiring 20 planes. KLM Royal Dutch Airlines NV will cut seats 5 percent this month.

  British Airways shares fell as much as ?15, or 9.2 percent to ?148.

  The workforce reductions include 1,800 job cuts the airline announced earlier. The UK carrier, which already fired 3,000 people last year, said it hoped to avoid compulsory firings in its latest cuts, though analysts said more job losses are expected in the industry.

  "There's the prospect of more cuts to come from Lufthansa," said Chris Tarry, an airline analyst at Commerzbank in London.

  "If you take capacity out of the market then you have to take labor out as well. It's going to be a struggle for any airline to make a profit this year." British Airways and its rivals were already facing the biggest slowdown in passenger and cargo traffic in almost a decade because of the slowing economy, and European airline chiefs will today ask EU officials for tax and regulatory relief to help them to continue flying.

  Air France Chief Executive Jean-Cyril Spinetta, Lufthansa Chief Executive Juergen Weber and KLM Chief Executive Leo van Wijk will ask EU Transport Commissioner Loyola de Palacio today to allow government tax cuts and permission to negotiate capacity reduction with their rivals.

  Carriers such as British Airways and Virgin are likely to be among the worst affected by both the slowdown and the aftermath of last Tuesday's terrorist attacks because of their reliance on profits from US services, analysts have said.

  After British Airways, Lufthansa is the European carrier which depends the most on the trans-Atlantic market, with 6.9 percent of seats on routes to the US.

  In the US, the job and capacity cuts have been even deeper, with American Airlines parent AMR Corp and United Airlines owner UAL Corp each eliminating 20,000 jobs and Boeing Co, the No. 1 planemaker, firing 30,000 people as the demand for aircraft dries up.

  The White House will ask Congress to approve US$5 billion in government aid to compensate US airlines for losses from the nation's two-day air travel shutdown, the Associated Press reported, citing an unnamed administration official.

  Lawmakers will also consider a request for an additional US$12.5 billion in loan guarantees made by Delta Air Lines Inc Chief Executive Leo Mullin, AP said.

  Airlines are dropping routes and using smaller planes as passengers fly less after terrorists hijacked planes last week and crashed them into targets in the US.
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