U.S. agrees airline bailout, job cuts hit Asia
U.S. agrees airline bailout, job cuts hit Asia
SINGAPORE/CHICAGO (Reuters) - U.S. government leaders agreed
on a US$15 billion bailout of the national airline industry as
last week's hijacking attacks led to aviation job cuts spreading
to Asia on Friday.
"There's $5 billion of immediate cash aid" for U.S. airlines,
said Senate Majority Leader Thomas Daschle told reporters.
The package also included about $10 billion in loan guarantees
and provisions for the U.S. government to consider paying some
claims of victims of the attacks, he said.
Korean Air Co Ltd revealed plans for job cuts on Friday,
although it did not specify how many.
Asian carriers appear to have been less affected than their
U.S. and European competitors by the attacks, which have deterred
people from flying, hitting the fragile profitability of the
industry just as it faces the cost of new security measures.
On Thursday, European industry leader British Airways Plc
announced sharp cutbacks in jobs and flights in the face of
sharply falling demand, following nearly 100,000 job cuts
announced by the U.S. aviation industry.
"We face exceptional conditions which have forced us to take
very tough decisions," British Airways Chief Executive Rod
Eddington said in a statement that announced a 10 percent cut in
flights and 7,000 job losses.
Number-three U.S. carrier Delta Airlines Inc joined its main
rivals on Thursday by saying it planned cost cuts, unspecified
layoffs, and service cuts of 15 to 20 percent.
Fourth-ranked Northwest Airlines Corp is expected to announce
layoffs on Friday and a permanent 20 percent flight-schedule
reduction.
After U.S. leaders agreed on a rescue package, Republican
House Speaker Dennis Hastert said he expected the full House of
Representatives to vote on the necessary bill later on Friday.
Daschle said the Senate would vote on it as soon as possible.
The two men spoke to reporters shortly after midnight
following a nearly two-hour negotiating session involving
Republican and Democratic leaders from both the House and Senate
as well as officials from the Bush administration.
White House budget director Mitch Daniels, emerging from the
meeting, said the Bush administration supported the package.
Korean Air had said on Thursday it would seek government
assistance due to increasing costs in security and insurance.
On Friday, a spokesman said: "Our restructuring plans will
include a certain amount of job cuts, although the size and time
frame is under review."
The airline would also cut services to U.S. cities.
European Union officials are also looking at relief for their
airlines, which are suffering badly from the attacks but not so
severely as U.S. carriers.
After an emergency meeting in Brussels with top airline
executives, EU Transport Commissioner Loyola de Palacio said aid
-- normally ruled out by EU competition laws -- might be
permitted, but other measures should be considered first.
Boeing Co., the world's largest jet maker, said on Tuesday it
would lay off between 20,000 and 30,000 workers -- up to 15
percent of its work force -- by the end of next year in
anticipation of a sharp drop in orders.
Chicago-based Boeing on Thursday said it was working with
major aircraft lessors to finance new commercial jets ready for
delivery to battered airline customers. So far no orders have
been cancelled, but Boeing was bracing for the worst.