In Washington, lawmakers scrambled to put together a rescue plan for the airlines, which Transportation Secretary Norman Mineta said could be ready early next week.
The No. 2 US carrier, United Airlines, which has already cut its flight schedule by 20 per cent to about 1900 daily flights, said it would slash about 20,000 jobs, or about 20 per cent of its workforce.
United chairman and chief executive officer James Goodwin said he is working with other North American carriers, government officials and lawmakers on a relief package.
"Without this relief, the viability of the nation's air transportation system is in doubt. It is as serious and straightforward as that," Goodwin said in a statement.
AMR Corp. said it would layoff at least 20,000 people at its American Airlines, American Eagle and TWA units.
The airline industry has been rocked by the plunge in travel and increased security costs since hijacked jets crashed into the World Trade Center in New York and the Pentagon in Washington.
Airline executives and industry experts had predicted 100,000 jobs would be lost from the downturn in air travel.
The world's biggest airplane maker, Boeing Co., yesterday said it would lay off between 20,000 and 30,000 workers -- up to 15 per cent of its work force -- as it girded for a sharp drop in orders. One of its biggest customers for airplanes, China, said that it would proceed with an order for 30 Boeing jets.
Chicago-based Boeing cut its forecast for aircraft deliveries and said the downturn could run into 2003 as US airlines reduced flight schedules.
America West Holdings Corp. said Wednesday it was one of several airlines that may be forced to file for bankruptcy unless Congress quickly provides financial aid to the industry.
"... several airlines are anxiously watching these proceedings and if something can't be done would very likely be forced to file bankruptcy in a number of days," America West Chief Executive Douglas Parker told a House Transportation Committee hearing. "America West is one of those several airlines."
Moody's Investors Service downgraded the credit ratings of the three largest US airlines, a step that usually portends higher borrowing costs. American Airlines and Delta were dropped to junk bond status and United Airlines debt fell four notches deeper into junk. Altogether, the Moody's downgrades affected about $US38.8 billion of debt,
Standard & Poor's, another credit rating agency, is reviewing all large US airlines' ratings for downgrades.
US Airways Group told shareholders at its annual meeting on Wednesday that the nation's sixth-largest carrier had less than $US1.2 billion in cash on hand.
Industry analysts had estimated the airlines were losing $US250 million to $US300 million a day before resuming reduced flight schedules late last week.
The major US carriers were seeking $US17.5 billion in assistance from the US government, down from $US24 billion sought earlier in the week, the group's trade organization said earlier Wednesday.
The earlier package included $US7.8 billion in tax relief that lawmakers indicated early on would not be granted.
Air Canada, the sixth largest airline in North America, also cut its flight schedule 20 per cent and was seeking US$US2 billion to $US2.6 billion in Canadian government aid due to the crisis.
Tourism in Mexico has also been hard hit by the decline in air travel, and the country's top two airlines warned they may also have to lay off workers.
In Europe, a delegation including airline chief executives is due to meet EU Transport Commissioner Loyola de Palacio on Thursday.
"They are going to be talking about issues of how the commission can help in any way the airlines at the moment," a spokesman for the carriers told Reuters, adding that they had no specific wish list.
European commercial plane maker and Boeing rival Airbus SAS last month had cut its target for 2003 deliveries to 400 aircraft from a previous goal of 450 because airlines were delaying orders. Airbus, owned by the European Aeronautic, Defense & Space Co. and BAE Systems Plc, said it has developed automated manufacturing techniques that allow it to adjust more easily to market shifts.
The attacks have suppressed US demand for air travel so much that domestic flights are no more than half full, some airlines have said. An industry association has forecast traffic could drop 25 percent to 65 percent in coming weeks and months as fearful passengers cancel or postpone trips.
Fears of such effects worldwide have led shareholders over the past week to dump airline stocks, which were already suffering from a global economic downturn.
The Standard & Poor's Airlines Index slipped 0.96 point, or 0.26 percent, to close at 374.64 Wednesday, after bouncing from the day's low of 364.32. The index fell 30 percent on Monday.
Airline earnings were notoriously fragile, since the companies usually make thin profit margins, carry large fixed costs that do not diminish when revenues fall, and are often highly geared, with debt greatly exceeding equity.
The only bright spot in the global industry appeared to be Asia, where four Asian carriers issued statements suggesting relatively stable demand a week after the attacks - far from the marked downturn in bookings that US airlines have seen.
- REUTERS
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