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US airline industry faces wave of post-Labor Day job cuts

Josh Mitchell, Dow Jones Newswires  Aug 20, 2008

WASHINGTON - The airline industry is set to suffer its biggest wave of job losses since 2001, as carriers prepare to shed tens of thousands of jobs after the U.S. Labor Day holiday in September to cope with high fuel prices.

Airlines have collectively announced plans this year to cut more than 36,000 jobs, according to the Air Transport Association of America, an industry trade group. Most of the cuts will happen in the weeks and months after the summer flying season ends.

By year's end, the work force, which numbered 414,600 full-time equivalent employees in June, is projected to have been slashed by between 12% to 15%, according to U.S. Bureau of Labor Statistics officials. That would be the biggest wave of job losses in the industry since 25% of jobs were lost immediately after the Sept. 11, 2001, terror attacks.

No. 1 carrier American Airlines, a unit of AMR Corp. (AMR), is aiming to cut its full-time equivalent work force by up to 8%. No. 2 United, a unit of UAL Corp. (UAUA), has said it will cut 5,500 jobs by year's end, and Continental Airlines Inc. (CAL), the industry's fourth-largest employer, will shed 3,000 positions, mostly through voluntary buyouts.

They aren't alone, as most other big airlines have announced cuts.

"Our industry is shrinking to survive," said John Heimlich, vice president and chief economist of the Air Transport Association of America.

Fuel prices appear to have already discouraged hiring. The Bureau of Transportation Statistics reported Tuesday that airline employment increased a slight 0.1% in June from a year ago - the smallest year-over-year increase since a decrease in January 2007. Employment has increased every year-over-year month since then. But then increases have been in the single digits, percentage-wise, and haven't been nearly enough to return staffing to pre-September 11 levels.

The Air Transport Association estimates that airlines will spend $61 billion on fuel this year, $20 billion more than they spent in 2007. It blames fuel prices in part for the closing of 10 airlines since 2007.

Many of the staffing cuts are required by the elimination of flights.

The bulk of those cuts will come after the summer travel season.

Airlines have begun offering voluntary severance packages to employees in the hope of avoiding layoffs.

"Right now we're seeing flight attendants weighing their options, deciding if this is something they can do, they want to do," said Corey Caldwell, spokeswoman for the Association of Flight Attendants, which represents more than 55,000 workers at 20 airlines.

The cuts come as airlines have also reduced services and added fees to increase revenue.

"As the months of this year go by, the employment ranks in the U.S. passenger airline sector continue to decline, which should not be any surprise. given the financial condition," Heimlich said. "High energy prices have taken a toll on us in two ways - higher fuel expenses and less disposable income for our customers to spend on air travel and shipping."

US airline industry faces wave of post-Labor Day job cuts

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