For airlines, an 'unprecedented' crisis

Continental furloughs 12,000; four airlines cut schedules By Mike Maynard, CBS MarketWatch.com Last Update: 8:37 PM ET Sept. 15, 2001

CHICAGO (CBS.MW) -- Continental Airlines announced plans Saturday to furlough 12,000 employees, a move it said was the "direct result of the current and anticipated adverse effects" on air travel stemming from Tuesday's suicide attacks.

And late Saturday, United Airlines became the fourth major carrier to announce a 20 percent reduction in flight schedules because of dropping demand.

Airlines also face "operational and financial costs of dramatically increased security requirements," as mandated by the Federal Aviation Administration, Continental said.

In addition, the Houston-based carrier it's cutting back at once its long-term flight schedule by about 20 percent. Continental (CAL: news, chart, profile) typically flew more than 2,500 fights a day before the events of Sept. 11.

United, Northwest Airlines and American Airlines also said they will cut out 20 percent of their schedules. They did not announce furloughs.

Commercial aviation in the United States was grounded for nearly two full days this week after hijackers commandeered a total of four commercial airliners, two of which were crashed into the World Trade Center and a third into the side of the Pentagon.

"The U.S. airline industry is in an unprecedented financial crisis," said Gordon Bethune, chairman and CEO of Continental. "We call on the president and members of Congress to take immediate action to restore the stability of this vital industry."

Plans to extend U.S. airlines $15 billion in aid surfaced Friday on Capitol Hill, but the House balked at passing such a package overnight as some members said additional time was needed to study the measure. See full story.

Bethune said "immediate" action is required by Congress.

Against this backdrop, Bethune said executives at Continental "have no choice" but to cut back on service and issue furloughs for more than 20 percent of its work force.

These developments played out during a day when most U.S. airports were in the middle of the arduous task of returning to normal operations, and with airlines gradually scaling up their service.

Delta Air Lines (DAL: news, chart, profile), which flew over 1,000 flights on Friday, said it expected to fly 60 percent of its normal Saturday schedule, including limited international service.

American Airlines (AMR: news, chart, profile) said it expected its Saturday flights to equate to 50 percent of its normal schedule, while subsidiaries TWA and American Eagle were supposed to fly at least 85 percent and 70 percent of scheduled service, respectively.

Aiming to scale the number of flights it flies over the next several days, United Airlines (UAL: news, chart, profile) said its weekend service will total 500 domestic flights before doubling to 1,000 a day starting on Monday. The carrier expects to reach 1,500 flights on Wednesday with service ultimately set to total 1,900 a day.

Meanwhile, Reagan Washington National in the nation's capital remained closed, the only major U.S. airport still shut down. Emplty planes were allowed to leave, but only after stringent security checks. They were required to fly south from the airport, away fom Washington.

After taking steps to come into compliance with the FAA's stringent new securities procedures, Boston's Logan Airport resumed air service early Saturday, hours after Midway Airport in Chicago reopened.

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-- Martin Thompson (mthom1927@aol.com), September 15, 2001