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CNN Live At Daybreak

Turbulent Times Still Ahead for Airlines

Aired August 13, 2002 - 06:06   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CAROL COSTELLO, CNN ANCHOR: The nation's airlines devastated by the September 11 attacks are still having a tough time recovering. One airline has filed for Chapter 11 bankruptcy protection, USAir. Another may be on the verge of doing so, and shares of others are falling.
CNN's Patty Davis has that report.

(BEGIN VIDEOTAPE)

PATTY DAVIS, CNN CORRESPONDENT (voice-over): US Airways flights taking off as scheduled, as the airline discussed its bankruptcy plan in court.

DAVID SIEGEL, CEO, US AIRWAYS: We told our customers they'd see no change in our operation; that this would be transparent to them, of business as usual, and we have a very successful operation today.

DAVIS: But the airline, hit hard by the recession in the September 11 terror attacks, warned of route cuts and layoffs ahead.

US Airways could soon be followed by another major airline.

DARRYL JENKINS, GEORGE WASHINGTON UNIVERSITY: Outside of US Airways, right now it's United Airlines. They have a very big debt payment due at the end of the year. If they make that payment, then they become dangerously low on cash, and at that time, they could possibly file.

DAVIS: United lost more than $2 billion last year, and losses this year are mounting. United is counting on getting billions in federal loan guarantees to help it survive.

(on camera): United and US Airways aren't alone. The major U.S. airlines, with the exception of Southwest, lost nearly $8 billion last year, because of the travel slowdown. They are expected to lose another 5 billion this year.

RAY NEIDL, AIRLINE AEROSPACE ANALYST: What's killing the airlines is the low yields and the discounting going on, and particularly the business traveler either using discount fares or not traveling.

DAVIS (voice-over): The major airlines are cutting where they can to save money, cutting out meals on shorter flights, doing away with senior discounts. United's pilots and other workers have agreed to wage concessions. Delta says it may reduce employee health benefits. But analysts say until the economy picks up, there could be more turbulence ahead.

Patty Davis, CNN, Washington.

(END VIDEOTAPE)

COSTELLO: And on the subject of airlines having trouble, this just crossed the wire. American Airlines is planning to cut 7,000 jobs by next March. They want to reduce their capacity by 9 percent by November, and they say they have to do that in order to compete.

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