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Wednesday, 19 September, 2001, 16:51 GMT 17:51 UK
Airlines face 'economic abyss'
Northwest plane takes off, AA planes on ground at La Guardia airport, New York
Airlines say they must slash costs to survive
US lawmakers have urged the government to take swift action to support the crisis-hit airline industry.

"We have to get this done as soon as possible or we will not have an air transportation system," said Don Young, chairman of the House transportation committee, at the opening of a hearing into the industry.

The company is going through cash at an alarming rate

Stephen Wolf, US Airways chairman
James Oberstar, the senior Democrat on the committee, said the airline was now "teetering on the edge of an economic abyss".

The committee meeting got underway amid fresh warnings from airlines that they were rapidly running out of money. Click here to see how the world's airlines are cutting costs

Here tomorrow?

"The company is going through cash at an alarming rate," US Airways chairman Stephen Wolf said at the company's annual shareholder meeting.

"We have got to get our costs down dramatically if we are going to be here tomorrow."

Almost no airline is strong enough to survive for long

Leo Mullin, Delta Airlines chairman

He said the industry was now facing the sharpest declines in revenue he had ever seen.

United Airlines, which has yet to give details of how it will react, was reported to be preparing to announce a cut of 20,000 jobs - 20% of its workforce.

"Almost no airline is strong enough to survive for long, facing the upcoming challenges," said Leo Mullin, Delta Airlines chairman, who was representing the airlines at the committee hearing.

Rescue next week?

The US government has already pledged to bail out the country's aviation industry, which is slashing jobs in a bid to avoid the catastrophic fall-out from last week's attacks.

Transportation Secretary Norman Mineta earlier said he hoped to have a financial rescue package ready for Congress by early next week.

But he stopped short of promising the $24bn (16.4bn) initially demanded by the industry.

US airlines on Wednesday said they were now seeking $17.5bn in assistance. Lawmakers had earlier indicated they would not agree to the $7.8bn in tax relief earlier requested.

Boeing job cuts

The renewed calls for support came the day after Boeing, the world's biggest jet maker, announced it would be slashing 20,000-30,000 jobs by the end of next year as airlines cut flight schedules and aircraft orders.

Some US airlines have also warned that, without a comprehensive rescue package, they may have to start filing for Chapter 11 bankruptcy protection within days.

European airlines including British Airways and Virgin Atlantic have also urged governments to ensure the region's carriers are not left at an unfair disadvantage when US aid is handed out.

Security costs

America's airlines say they need help in the short term to overcome the drop in passenger numbers following last week's atrocities.

Some estimates suggest the customer downturn is costing them $1bn a day.

Carriers have said they also need longer term help in tackling increased insurance and fuel costs and tighter security.

Major US airlines have already announced more than 26,000 lay-offs, and the industry has warned that figure could grow to 100,000 in coming weeks.

The US government has acknowledged the crisis in the industry.

Mr Mineta said: "The industry had been having financial difficulties even before this heinous terrorist event.

"Those events have made the problem more acute."

Blank cheque warning

Analysts are predicting a long road to recovery for the sector, which many believe was suffering from overcapacity before last week's terror attacks.

And advisers to President Bush have voiced caution about providing federal aid to companies that faced financial problems before 11 September.

Republican lawmaker Roy Blunt of Missouri warned that the airlines should not expect a "blank cheque".

Drastic measures

Many airlines and aviation companies around the world have already taken drastic measures to cut costs:

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See also:

19 Sep 01 | Business
Turmoil threatens superjumbo orders
19 Sep 01 | Business
US aviation crisis deepens
19 Sep 01 | Business
Boeing: From biplanes to space craft
18 Sep 01 | Business
UK airlines call for state aid
13 Sep 01 | Business
Air industry faces bleak outlook
17 Sep 01 | Business
Airline reservations slump
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