INDEPTH: AIR CANADA
World airline woes: Carriers hit financial turbulence
CBC News Online | January 29, 2004
Along with the rest of the world's airline industry, Air Canada is crumbling under the weight of mounting debts brought on, in part, by travellers increasingly wary of air travel. It was an industry already depressed before the Sept. 11, 2001, attacks rocked the United States. Since that time, however, airlines have reported worldwide losses of some $30 billion US and 400,000 jobs. Here is a look at how some airlines have coped (all figures in U.S. dollars):
American Airlines |
British Airways |
Continental Airlines
Sabena Airlines |
Swissair |
United Airlines |
US Airways
American Airlines
Based: Fort Worth, Tex.
Size: Largest airline in the world
Status: Narrowly averted bankruptcy
Losses: $1 billion first quarter loss for 2003; $3.5 billion loss for 2002
Actions:
announced 7,000 job cuts in April 2003
reached deals with unions to cut the wages of thousands of workers
13,500 members of the pilots union agreed to wage and benefit cuts totaling $660 million
70 per cent of the airline's 100,000 workers will vote on the wage cuts, which amount to between 15 and 20 per cent. It's hoped these cuts will save the airline $1.8 billion
The airline is restructuring its fleet to eliminate its stock of Boeing 717, 727 and 767-300 aircraft, as well as its 74-jet fleet of Fokkers. The move is meant to standardize the fleet and to simplify maintenance.
British Airways
Based: London, England
Size: Largest airline in Europe
Status: Turning a profit
Profits: $39 million for the fourth quarter of 2002
Actions:
3,000 job cuts
cut capacity to one-fifth of 2001 levels; announced along with Air France that it would retire the supersonic Concorde jetliner
extending unpaid leave for staff
Continental Airlines
Based: Houston, Tex.
Size: Fifth-largest airline in U.S.
Status: Continental is cutting costs to avoid bankruptcy
Losses: 2003 first quarter loss of $221 million; 2002 fourth quarter loss of $149 million (that's despite a $174-million federal bail-out package)
Actions:
has cut 5,500 jobs since Sept. 2001 attacks, including 25 per cent of its top management
Sabena Airlines
Based: Brussels, Belgium
Status: Entered bankruptcy Nov. 7, 2001. Re-formed as Brussels Airlines
Belgium's former national airline went bankrupt on November 7, 2001, taking with it 12,000 jobs. Its successor - Brussels Airlines - entered service the next month. The new airline cut the previous workforce in half, scrapped a number of unprofitable routes and cut its fleet of aircraft to 11. Despite the cuts, it too is reporting losses and, on average, fills only 40 per cent of its seats.
Swissair
Based: Zurich, Switzerland
Status: Folded March 31, 2002. Re-formed under the Swiss banner
The last Swissair flight landed on March 31, 2002. Its successor - Swiss - was created using a cash infusion of $2.65 billion. The Swiss government picked up most of the tab. The new carrier is a scaled-down version of its predecessor, but even it has not escaped the red ink. Swiss reported a $664-million loss for its first year in service. In late February 2003, the airline announced it would try to stem further losses by cutting 700 jobs and retiring 20 planes.
United Airlines
Based: Chicago, Ill.
Size: Second-largest airline in the world
Status: Entered bankruptcy protection (the largest in aviation history) December 8, 2002. Hopes to exit bankruptcy protection by mid-2004.
Losses: 2003 yearly loss of $2.81 billion; 2002 yearly loss of $3.21 billion
Actions:
cut workforce by 20 per cent during 2003
re-negotiated salaries
outsourced maintenance
US Airways
Based: Arlington, Va.
Size: Seventh-largest airline in U.S.
Status: Exited bankruptcy protection Mar. 31, 2003 (Entered bankruptcy: Aug. 12, 2002)
Actions:
cut workforce by 36 per cent
secured $1.24-billion loan
negotiated wage cuts with employees
cut available seats by 30 per cent
cut fleet to 280 aircraft from 311
cut number of available flights by 25 per cent compared to pre-Sept. 11 levels
slashed annual costs by $1.9 billion
cut debt load from $10.65 billion to $8 billion
The company restructured to focus more on regional service. To do this, the airline cut its fleet of jets by one-third, and announced it will order 50 50-seat and 50 70-seat regional jets from either Montreal-based Bombardier or Empresa Brasileira de Aeronautica SA of Brazil.
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