Boeing Announces Layoffs

N E W   Y O R K, Sept. 18, 2001 -- The Boeing Company announced that it will lay off 20 percent of its workforce — up to 30,000 employees — in wake of last week's terror attacks.

The layoffs at Boeing are the latest in an industry hit hard by the hijacking and crashing of four U.S. passenger jets on Sept. 11. Continental Airlines, US Airways and other airlines also have announced layoffs.

In a statement released tonight, the Seattle-based Boeing said the layoffs were in response to last week's terrorist attacks as well as the anticipated drop in business for the rest of the year and in 2002. The airplane manufacturer said it will lay off 20,000 to 30,000 people by the end of 2002.

"We profoundly regret that these actions will impact the lives of so many of our highly valued employees," said Alan Mulally, president and CEO of Boeing Commercial Airplanes. "However, it is critical that we take these necessary steps now to size the commercial airplanes business to support the difficult and uncertain environment faced by our airline customers."

Boeing said its deliveries, which were anticipated to reach 538 by the end of this year, could now be as low as 500. Its deliveries for 2002, initially expected to exceed 500 in 2002, may reach the low 400s.

Losses and Remedies

Boeing's announcement came as troubled U.S. airliners came one step closer to a potential federal bailout today, as top industry officials met at the White House to carve out a multibillion-dollar aid package to take to Capitol Hill.

Transportation Secretary Norman Mineta, following the meeting today, said the industry may be losing as much as $300 million a day. Industry officials said they were seeking aid in the neighborhood of $24 billion.

Delta Air Lines head Leo Mullin argued the move was necessary to ensure the industry does not become the war on terrorism's first major economic casualty. Revenue was lost entirely in three of the four days last week following Tuesday's terrorists attacks, explained Mullin, and in coming days revenue would be no more than 40 percent to 50 percent of normal.

"The tragedy of last week certainly affected America in every way," he added. "And it is, from the standpoint of the airline industry, perhaps the biggest challenge in our history."

Mineta offered no details on the package following the meeting, but said he would bring a plan to lawmakers as early as next week. Senate Majority Leader Tom Daschle said later, however, that the House may act as early as this week, and is planning hearings Wednesday. Senate hearings are scheduled for Thursday.

Setbacks Follow World Trade Disaster

The terror attacks and their aftermath have resulted in a colossal, unprecedented setback for the entire airline 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.

Since then, a number of airlines have announced severe cutbacks. US Airways announced Monday it will lay off 11,000 employees and reduce its flight schedule by 23 percent.

Over the weekend, Continental Airlines announced it was laying off 12,000 employees, while warning it might have to file for bankruptcy in October. 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.

Two smaller carriers also announced cutbacks. America West will eliminate 2,000 jobs and American Trans Air will lay off 1,500 employees. And regional carrier Midway Airlines has already folded.

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

Bailout Coming?

The unprecedented situation has members of Congress discussing the terms of a financial bailout, and even before the terrible day on Wall Street, airline industry leaders were calling for government intervention to help the industry make it through the bleak times ahead.

"If you want to have an air transportation system in this country that can get the economic engine running again, you're going to have to do something," said Continental Airlines CEO Gordon Bethune this weekend.

Reduced demand, more expensive security measures and possible liability lawsuits related to Tuesday's hijackings could all serve to greatly increase the airlines' financial woes.

Already it appears that it will take a long time before the U.S. airlines return to the level of service they had before the attacks: 2 million passengers a day on 40,000 domestic flights alone.

"We are looking at an entirely new environment," said Marianne McInerney, executive director of the National Business Travel Association, or NBTA, in Virginia. "We are looking at travel that will take longer, cost more, and create much more frustration."

The financial impact of the horrifying tragedy could come to $10 billion, or up to $1 billion per day, according to the International Air Transport Association, an industry trade group representing 266 airlines.

At least 40 percent of the airlines' normal operating costs continued even with all their planes grounded, including wages for crews and workers, and just about every normal expense other than fuel and landing fees.

The airlines typically keep about 15 days' worth of cash reserves on hand. And while many of them figure to have resumed significant portions of their services during that time, the downtime could significantly eat into that tucked-away cash.

Then there are the potentially expensive settlements that may be paid out to the families of the victims by United Airlines and American Airlines. Each airline had two planes hijacked last Tuesday.

ABCNEWS' Terry Moran and ABCNEWS.com's Peter Dizikes contributed to this report.