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Monday, 17 September, 2001, 15:04 GMT 16:04 UK
Virgin Atlantic cuts 1,200 jobs
Virgin Atlantic tail fins
Virgin Atlantic will begin to scale back flights
Virgin Atlantic is to cut 1,200 jobs in response to the aftermath of last week's terror attacks on America.

It is clear to everyone that there will be significantly less traffic across the North Atlantic for some time

Richard Branson
Airlines have been hit hard by the hijackings, which brought devastation to New York and Washington DC.

In addition to the costs of delays and disruption - and the cost of introducing new security measures - carriers have had to cope with a dramatic drop in passenger numbers.

International travel reservations agency Amadeus revealed that bookings in the four days after the attack had slumped by more than one quarter.

'long-term effect'

Virgin said it will use smaller planes on some routes as a result of the "long-term effect" of the attacks.

Capacity will be reduced to North America, but Virgin said it will increase capacity to the Far East and to South Africa.

A Virgin spokesman said: "We will take all possible measures to avoid compulsory redundancies.

"We are looking to offer job opportunities to staff in the rest of the Virgin group."

Virgin Active, the group's leisure and health club business, is creating 700 new jobs and will give priority to Virgin Atlantic staff, the company said.

'Exceptional circumstances'

The reduction in Virgin Atlantic services will start in October.

Chairman Sir Richard Branson said the decision had been forced on the company by the consequences of last week's "tragic" events.

"Virgin Atlantic needs to respond quickly and responsibly to match these exceptional circumstances and the consequential reduction of future customer demand," he said.

"It is clear to everyone that there will be significantly less traffic across the North Atlantic for some time.

"By taking this action now we will put ourselves in a position from which to expand again in the future."

Sir Richard thanked his staff for their "spirited and professional" response in the past week.

The airline employs around 9,000 staff worldwide, including 7,400 in the UK.

US airlines suffer

Shares in American airlines lost an average of 30-40% in early trading on Wall Street on Monday, when stock markets re-opened for business for the first time since last week's terror attacks.

Shares in AMR, the parent company of American Airlines, plummeted $12.50, or 42%, to $17.20 in early trading on the New York Stock Exchange.

Major carriers have lost some $1bn in the past week as a result of reduced demand from fearful travellers and the cost of a two-day shutdown following the attacks.

American, Continental, Delta, Northwest and United have announced severe scheduling cutbacks.

Delta expects to fly 75% of its normal schedule, while American, Continental, Northwest and United plan to operate at 80% of their normal schedules.

Bail-out appeal

The industry was already struggling under a large debt burden and rising costs of labour and fuel.

Revenues from business fliers was dropping in line with America's declining economic performance, with carriers cutting fares to compete for remaining passengers.

Analysts say the industry could lose more than $4bn this year.

Airlines are expected to appeal to the federal government this week for a bail-out of between $10-20bn that includes direct aid, low-interest loans, tax relief and a takeover of insurance liability from claims related to the terrorist acts.

Sir Richard Branson, Chairman of Virgin Atlantic
"Costs have gone soaring through the roof"
The BBC's Simon Montague
"It looks like getting a lot worse before it gets better"
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