With the possibility of war taking a huge toll on U.S. airlines, there are growing fears that some won't survive.
Already battered by the weak economy and the post-Sept. 11 travel slump, the airline industry is in increasing trouble as skittish travelers postpone or cancel trips.
For The Record
Los Angeles Times Thursday March 20, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 48 words Type of Material: Correction
Airline woes -- A headline in Wednesday's Business section on an article about the effect of impending war on airlines incorrectly stated that analysts said United Airlines and US Airways may find it impossible to emerge from Chapter 11 bankruptcy protection. The analysts were referring only to United.
Continental Airlines eliminated several transatlantic flights Tuesday, citing reduced demand, and all carriers braced for the falloff in travel to intensify once the fighting begins.
Lagging ticket sales, combined with rising costs for fuel, insurance and security, have left the industry in its worst condition since it was deregulated 25 years ago.
After losing a staggering $11 billion last year, airlines could lose $7 billion to $10 billion this year -- perhaps more if the war were to drag out.
Speculation is mounting that AMR Corp.'s American Airlines, the world's largest, could file for bankruptcy protection by summer. Two carriers, UAL Corp.'s United and US Airways, are in bankruptcy reorganization. And United, the biggest operator at Los Angeles and San Francisco international airports, might not emerge from Chapter 11 and could be liquidated instead, some analysts said.
Whether United will make it out of Bankruptcy Court "is still a really big question," said Jon Ash, managing director of Global Aviation Associates, a consulting firm in Washington. The airline said this week that going out of business "is a distinct possibility" if it doesn't secure wage cuts fast enough to offset the loss of passenger revenue.
Other carriers, such as Delta Air Lines, Northwest and Continental, are desperately trying to save cash in case more travelers stay home.
The airlines are begging Washington for help, and Transportation Secretary Norman Y. Mineta said Tuesday that the Bush administration "will be ready to move very quickly" to support the carriers "if the need arises." Mineta, speaking at an aviation conference, offered no details.
Rep. James Oberstar of Minnesota, the ranking Democrat on the House Transportation Committee, today plans to introduce a bill to help airlines deal with the war's blow.
The bill would reimburse the airlines for their heightened security costs, cap their war-risk insurance premiums, release oil held in government reserves to ease soaring fuel costs, and make U.S. loan guarantees available to the airlines for fuel purchases.
