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Thursday, 20 September, 2001, 15:52 GMT 16:52 UK
Airlines slash thousands of jobs
American Airlines
American Airlines: The US' biggest carrier
US air carriers American Airlines and United Airlines have announced they are laying off 40,000 employees because of declining air traffic since last week's suicide attacks in New York and Washington.

The parent company of American Airlines will lose 20,000 workers - spread across American, Trans World Airlines and the American Eagle commuter carrier, the parent company, AMR Corporation.

This is, without a doubt, the most difficult thing I have had to do in my two decades at American

Donald Carty, American Airlines chairman
American, the world's largest carrier, had already said it would join other carriers in cutting its number of flights by 20%.

But the US Treasury Secretary, Paul O'Neill, told Congress that the US government would move swiftly to give aid to the industry, to ensure that the costs of extra safety measures and the increased costs of insurance did not fall on the industry.

The US government has proposed a $5bn handout to help US airlines and assist with insurance liabilities, but has stopped short of the $12.5bn the industry says it needs to stave off bankruptcies.

Pain spreads to Europe

Hours after the US announcements, UK carrier British Airways said it would sack 7,000 people - about 12.5% of its workforce - mothball planes and cut routes because of plunging demand.

United - America's number two airline which is also shedding 20,000 jobs - has been harder hit by the disaster than any of the other carriers.

In addition to losing two of its planes in the suicide bombings, it is more heavily reliant on business travel, expected to be adversely affected by the attacks.

Announcing the cuts, American Airlines Chairman Donald Carty told his workforce: "This is, without a doubt, the most difficult thing I have had to do in my two decades at American."

Boeing cuts

The news followed an announcement from Boeing, the world's biggest jet maker, that it would be slashing 20,000-30,000 jobs by the end of next year in response to other airline cut backs.

Flags at half-mast outside Boeing's former headquarters in Seattle
Flags at half-mast outside Boeing's former headquarters in Seattle
Some US airlines have warned that, without a comprehensive rescue package, they may have to start filing for Chapter 11 bankruptcy protection within days.

British Airways and Virgin Atlantic have urged governments to ensure Europe's carriers are not unfairly disadvantaged when US aid is handed out.

Click here to see how the world's airlines are cutting costs

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

Long term help

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

We profoundly regret that these actions will impact the lives of so many of our highly valued employees

Alan Mulally, Boeing
Shares in US airlines, which have lost nearly half their value since the attacks, made slight gains following news of the government's planned intervention.

The crisis in the industry is already spreading to the firms that depend on airline business.

Honeywell, which makes avionics, the electronic systems used in aircraft guidance, also announced it would be cutting 3,800 jobs, over and above the heavy lay-offs it has made already this year.

Click here to return to text

The BBC's Emil Petrie
"President Bush has offered $5billion in direct cash assistance"
Michael Boyd, Aviation Consultant
"Our airlines are paupers"
See also:

18 Sep 01 | Business
UK airlines call for state aid
13 Sep 01 | Business
Air industry faces bleak outlook
14 Sep 01 | Business
Airlines bankruptcy warning
18 Sep 01 | South Asia
Airlines suspend Sri Lanka flights
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