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.