Lean times ahead for airline, travel firms

Associated Press

NEW YORK — The stocks of major airlines and travel-related companies fell sharply Monday, with Wall Street jittery about long-term financial woes and, in some cases, bankruptcies in the wake of last week’s terrorist attacks.

The industry is lobbying for a $20 billion federal bailout, having lost $1 billion already because of weak demand from nervous travelers, a costly two-day shutdown of the nation’s air system and higher security-related expenses.

US Airways said Monday it expects to lay off 11,000 employees, roughly one-fifth of its work force, and cut its nationwide service by 23 percent.

"The entire U.S. aviation system is in jeopardy, and without decisive actions the future of the system, along with its impact on the nation’s economy, is imperiled," company chairman Stephen Wolf said in a statement.

Other major carriers have trimmed schedules by 20 percent and an industry group said as many as 100,000 airline layoffs are likely in coming weeks.

American Airlines, the nation’s largest airline, will announce layoffs later this week, a company official said on condition of anonymity. The exact number of layoffs will partly depend on the size of the federal bailout, the official said.

Continental, the fifth-largest carrier, laid off 12,000 employees, more than one-fifth of its work force, over the weekend.

On Monday, the airlines’ woes reverberated throughout the travel industry as shares of hotel, rental car and electronic ticketing companies became mired in the selloff.

Analysts say airlines are the most vulnerable over the long-term.

"We do not believe every airline’s survival is guaranteed under any circumstances," said Jim Higgins, analyst at Credit Suisse First Boston in New York. Higgins said the industry will lose at least $5 billion this year.

Shares of AMR Corp., the parent of American, plummeted $11.62, or 39 percent, to $18.08 on the New York Stock Exchange. Shares of UAL Corp., which owns United, dropped $12.90, or 42 percent, to $17.92 on the NYSE, where Delta plunged $16.74, or 44 percent, to $20.51 a share.

US Airways Group Inc. fell $5.57, or 52 percent, to $6.05, also on the NYSE. It announced the layoffs after the close of trading.

Electronic reservation firm Sabre Inc.’s stock fell $15.54, or 39 percent, to $23.89 on the NYSE and rival Galileo International Inc.’s stock tumbled $8.57, or 30 percent, to $20.03.

Online travel agencies trading on the Nasdaq Stock Market also were affected. Travelocity.com Inc. shares dropped $9.52, or 43 percent, to $12.50 a share and Expedia Inc. shares fell $11.50, or 31 percent, to $24.75.

Cendant Corp., owner of Days Inn and Avis, also got hurt in NYSE trading, with shares falling $3.31, or 19 percent, to $14.45. Shares of Marriott International Inc. dropped $8.43, or 21 percent, to $33.42 on the NYSE.