Airlines Face Financial Crisis; More Layoffs

ByABC News
September 18, 2001, 2:10 PM

N E W   Y O R K, Sept. 17 -- For the U.S. airlines, a few moments of terror last Tuesday are on the verge of turning into a colossal, unprecedented setback for the entire industry.

Commercial flights have gradually resumed in the days since four airliners were simultaneously hijacked and crashed Tuesday, with two of the planes destroying the World Trade Center in New York and one hitting national defense headquarters at the Pentagon in Arlington, Va. The fourth crashed in rural Pennsylvania.

But the stocks of the major airlines plummeted badly in heavy trading today, and this afternoon US Airways announced it will lay off 11,000 employees and reduce its flight schedule by 23 percent.

"The tragic events of September 11 have had a dramatic effect on the nation's aviation industry, including US Airways," said the carrier's president, Rakesh Gangwal, in a statement issued after the stock market closed. "As a result of reduced passenger demand as well as the ongoing requirements of new security procedures, US Airways has no choice but to reduce the number of its dailyflights."

Two smaller carriers also announced cutbacks. America West will eliminate 2,000 jobs and American Trans Air will lay off 1,500 employees.

On Saturday, Continental Airlines announced it was laying off 12,000 employees, while warning it might have to file for bankruptcy in October. And Continental, along with United Airlines and Northwest Airlines, is saying it may reduce its flight schedule by up to 20 percent, in the face of expected weak demand in the future.

Meanwhile, the stocks of major airlines and travel-related companies fell sharply today as Wall Street mirrored the industry's intense concern about the economy in the wake of last week's terrorist attacks.

Among the major carriers, American Airlines fell 39 percent, Continental Airlines dropped 49 percent, Northwest Airlines fell 37 percent, United Airlines dropped 43 percent, and US Airways was hit the hardest, plummeting 52 percent.

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