Continental Airlines has promised to cut yet more jobs in an attempt to save $500m and perhaps keep the company out of the financial storm that has engulfed many of its larger rivals.
Continental boss Gordon Bethune: We will be survivors"
Continental, the fifth-largest carrier in the United States, said it would axe 1,200 posts by the end of the year, "retire" 25% of its top management and look "in every nook and cranny" to achieve further savings.
Asian travel operators, meanwhile, have warned that the conflict in Iraq is seriously denting their business.
In Japan, overseas holiday bookings are sharply down in the run-up to Golden Week, the high-point of the country's holiday season.
Industry in trouble
A slump in travel after the terror attacks on September 11, rising fuel prices, intense competition from budget airlines and now the war in Iraq have all contributed to the difficulties of the travel industry.
In the United States two carriers, United Airlines and US Airways, have already sought bankruptcy protection, and some analysts have warned that the country's top airline, American, might follow.
In other countries, many airlines are suffering as well. Earlier this week Australia's Qantas cut 1,000 jobs, on top of 1,500 workers made redundant a month earlier.
Now the airline says that demand for international travel is expected to slump by 15% to 20%.
Air New Zealand was also pessimistic, saying that passenger numbers were down by up to 10% on key international routes.
Japanese airlines have also been hit hard, with flag carrier JAL warning that it will fly in a loss this year.
And in Japan the whole travel sector is under pressure.
Japan's longest holiday season, Golden Week, starts at the end of April and is normally the busiest time for overseas travel.
But this year bookings are down by between 25% to 40%, said Hitoshi Sato of Nippon Travel Agency: "We are in a severe situation. We have seen consistent falls in bookings for overseas travel as fears of war loom.".
Continental 'will survive'
Continental hopes that a raft of small savings will add up to enough of a cushion to survive the downturn.
Continental hopes to fly past bankruptcy
Paper tickets will be abolished worldwide by June 2004, contracts with suppliers will be renegotiated, and there will be talks to reduce airport and landing fees.
"We're not going to just sit idly by and wait for others to save us", said Gordon Bethune, Continental's chairman and chief executive.
Bookings on transatlantic flights have been particularly hard hit, the company said.
Continental has already put 4,300 workers on temporary unpaid leave, but for now has no plans for pay cuts for the rest of its staff.
Several of Continental's larger rivals have held torturous negotiations with their staff over cutbacks in pay and pensions.
"This company is going to be a survivor", Mr Bethune promised.
But he sounded a note of warning: a drawn-out conflict in Iraq lasting more than a month could create problems that would make more cost cutting necessary.