The beleaguered airline industry lost about $6 billion in total market capitalization on Monday as stocks of the top six U.S. airlines plunged by as much as 50 percent when trading resumed for the first time since hijacked planes were used in last Tuesday's terror attacks.
Representatives of the industry, which is lobbying for a $20 billion federal bailout, were scheduled to meet with administration representatives on Tuesday to discuss the industry's financial difficulties.
Layoff announcements from U.S. Airways and America West only added to the negative sentiment.
U.S. Airways it announced it would lay off 11,000 employees, or 24 percent of its work force, and drastically cut service. The company said it had no choice because the attacks had reduced passenger demand and prompted expensive new security requirements.
America West Airlines said it would cut about 2,000 jobs and reduce flights by about 20 percent because of the effects the East Coast terror attacks are having on air travel.
"Absent immediate intervention by the federal government, America West Airlines and its 14,000 employees are at risk because of these tragic occurrences," said W. Douglas Parker, the company's chairman, president and chief executive.
Wall Street remains extremely jittery about an industry facing long-term financial woes, and in some cases bankruptcies, in the wake of the attacks.
"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," US Airways chairman Stephen M. Wolf said.
Other major carriers have trimmed schedules or announced layoffs. Among them is Continental, which laid off 12,000 employees, or 21 percent of its work force, over the weekend.
An industry group warned that as many as 100,000 airline layoffs are likely in coming weeks.
"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. He said the industry will lose at least $5 billion this year.
American Airlines, the nation's largest airline, will announce layoffs later this week, a company official said on condition of anonymity. The exact number will partly depend on the size of the federal bailout, the official said.
American, Continental, Delta, Northwest and United have already scaled back their schedules by 20 percent.
As the equity markets reopened Monday, shares of airlines, hotel, rental car and electronic ticketing companies became mired in a huge selloff.
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.
Airlines weighed on the Dow Jones transportation index, which fell 15 percent, down 404.81 to 2,271.68.
Travelocity.com Inc., an Internet travel agency, dropped $10.36, or 47 percent, to $11.66 on Nasdaq while its rival Expedia Inc. was down $10.28, or 28 percent, at $25.97.
American, the world's largest carrier, saw the initially largest decline in market capitalization of $1.82 billion to $2.76 billion. Market capitalization is calculated by multiplying a company's share price by the total number of shares outstanding.
Reduced Demand, New Security Rules
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 the security-related expenses.
Airline executives are scheduled to meet with U.S. Transportation Secretary Norman Mineta and White House economic advisor Lawrence Lindsay on Tuesday to discuss the industry's financial difficulties.
New figures released on Monday show U.S. bookings fell 74 percent between September 11 and September 14, according to international reservations system Amadeus.
"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. He said the industry will lose at least $5 billion this year.
Continental on Monday said it will miss $70 million in payments on enhanced equipment trust certificates, known as ETCs, which are securities backed by aircraft. Holders of this debt get first claim on the jets in default situations.
The industry was already struggling under a large debt burden and rising costs of labor and fuel, as revenues from business fliers dropped alongside the nation's economic performance, while carriers cut fares to compete for remaining passengers.
Continental Chief Executive Gordon Bethune on Saturday warned that the airline could file for bankruptcy October without government assistance. As many as 100,000 airline jobs could be lost as all carriers lose mountains of money, a total $1 billion since last week. Other industries would suffer, too, he said.
``The airlines are driving the economy,'' he said.
Delta said that without aid soon, it will also consider job cuts. ``The airline industry cannot be the first casualty of this war,'' Chief Executive Leo Mullins told ABC-TV on Sunday.
National Airlines of Las Vegas announced Sunday it was cutting back its operations by 20 percent and laying off 300 workers, leaving it with 1,000 employees. Midway Airlines of North Carolina closed down last week while in the midst of reorganizing its financially troubled business, laying off 1,700 employees.
The U.S. House of Representatives failed last week to adopt a measure that would have offered the industry $12.5 billion in loan guarantees and another $2.5 billion in direct aid.
But Vice President Dick Cheney said on Sunday that the government was open to helping the industry staunch the financial losses.
The national air crisis comes at a critical time for U.S. airlines, already struggling with the economic slump, high fuel costs and increased labor expenses.
Reuters and the Associated Press contributed to this report.
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