By Theresa Bennett
Downloading PDF. Please wait... Issue 1768

Airline companies exploit the tragedy

This article is over 22 years, 9 months old
THOUSANDS of workers across Britain and the US are facing the prospect of redundancy in the aftermath of the events in the United States. Aerospace industry and airline bosses have been at the forefront of sacking thousands of workers.
Issue 1768

THOUSANDS of workers across Britain and the US are facing the prospect of redundancy in the aftermath of the events in the United States. Aerospace industry and airline bosses have been at the forefront of sacking thousands of workers.

Within just eight days Boeing, the largest aircraft manufacturer, announced it was axing 30,000 jobs. British Airways (BA) followed by slashing a total of 7,000 jobs, 13 percent of its workforce. Richard Branson’s Virgin Atlantic cut 1,200 workers’ jobs. Continental Airlines is the fifth largest carrier in the US. It is cutting over 20 percent of its staff, with 12,000 people set to lose their jobs.

Worryingly, Continental Airlines is viewed as the most financially sound of the US companies. This is a company that withstood two bankruptcies prior to 1994. ‘The companies are taking advantage of the situation to screw some money out of the government,’ Michael O’Leary, the boss of RyanAir, admitted last week. ‘There were going to be large job losses in the airline industry anyway because firms were losing money.’

Bush is reported to be ready to give a huge $24 billion (£16 billion) in ’emergency subsidies’ to the major US airline companies to bail them out. Millionaire Richard Branson, who owns 49 percent of Virgin Atlantic, wants a similar handout.

After meeting Stephen Byers, the transport secretary, Branson reported, ‘The government said they did not want to see the industry damaged and will do all they can to help.’ ‘There has to be a level playing field,’ says Rod Eddington, BA chief executive. Eddington is the man who was the former chief executive of the New Zealand airline company Ansett.

He bailed out just before Ansett went bust two weeks ago. Airline companies want to use the crisis to get the government to cut fuel prices and give them a rebate on the tax collected from aeroplane passengers. The airline companies could pocket £1 billion under this scheme. However, even some UK government officials are dubious about the true links between the attacks in the US and a fall in profits.

In the Financial Times one Whitehall official points out that ‘a number of airlines were reporting commercial problems even before the attack’. Before the events in Washington and New York the Economist admitted that, because of the global economic slowdown, ‘in May air travel fell in the US and Europe for the first time in a decade’.

There was a 2 percent reduction year on year in the numbers of passengers travelling.

A string of companies reported that they expected a fall in profits. They blamed the fall in profits on the global recession, high fuel costs, industrial disputes and a fall in numbers of business passengers. In the US only two companies, SouthWestern Airlines and Continental, were making a profit in July.

Air France, Lufthansa and BA were all operating at a loss. Between April and August 2001 BA’s profits plummeted by 50 percent. In response to losses of £244 million in May 2000 the BA chairman, Colin Marshall, said, ‘These results mark the end of the most difficult year that British Airways has had since privatisation.’

Marshall’s predecessor at BA, Bob Ayling, was forced out following similar failures. Dutch-owned KLM Airlines blamed a ‘substantial’ fall in profits, from the $87 million raked in the year before, on the global economic recession, and laid off 500 workers in August.

The world market is massively oversupplied with aeroplanes. As a result 802 planes were on sale in June. Company bosses are using the threat of terrorism to push through restructuring and cuts to adapt to the fall in demand. Workers have fought back.

The Economist described the situation on the airlines earlier this year: ‘Strikes and the threat of strikes are the scourge at the moment.’ On 4 July, a big travelling day in the US, American Airlines cabin crews threatened to strike over pay. In the US most airlines complain that they are ‘incessantly at war’ with their employees. United Airlines and North West Airlines have both had long-running disputes. It is little wonder that workers in the US have fought back. Anti-establishment figure and broadcaster Michael Moore reports that a first year airline pilot on American Eagle, the commuter part of American Airlines, earns just $15,000 a year.

He also revealed that a pilot with three children earned so little he was eligible for food stamps on welfare.

Industrial disputes are not just happening in the US. There have been major strikes and disputes on Iberia Airlines in Spain, Cathay Pacific in Hong Kong, Lufthansa and others.

Airline bosses have been trying to make workers pay for the downturn in business. BA had already made 1,800 job cuts prior to the disaster in the US. The Economist said that ‘it may be easier to drive change once airline companies are visibly having a tougher time. The recession will help, by cutting the demand for air travel. So will continued deregulation.’

Not only do these company bosses aim to disarm the airline workers’ ability to fight back, they also want to disguise the real crisis in the aviation industry caused by the economic crisis that was hitting them before the destruction of the World Trade Centre.

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