Iraq war could kill some airlines

CHICAGO, March 20 (UPI) -- A long war with Iraq could send more major airlines into bankruptcy court despite U.S. government promises to help the ailing industry, union leaders and analysts said Thursday.

American, Northwest, Delta, Continental and Air Canada all are losing money as people delay unnecessary travel because of geopolitical tensions and the uncertainty of possible terrorist attacks.

"Since Sept. 11, 2001, no industry has been hit harder than the airline business," said Teamsters General President James P. Hoffa. "More than 150,000 airline workers have seen their wages and benefits slashed as their employers fight to stay afloat."

Unions have called for extended unemployment benefits for laid-off airline employees, health care coverage that would pay 75 percent of the cost of extended temporary insurance and job retraining assistance.

"The Bush administration is in a unique position where they have the opportunity to assist the nation's airline workers who will surely be one of the first groups of workers to feel the economic impact of this conflict," said Hoffa.

U.S. Transportation Secretary Norman Mineta told an aviation conference in Washington the government was "ready to move very quickly if the need arises."

Congress approved $15 billion in aid to the industry after Sept. 11, 2001, attacks under the Air Transportation Stabilization Act but United Airlines filed for bankruptcy in December when its request for help was rejected.

Industry officials have projected the war could cost U.S. airlines $11 billion and 70,000 jobs.

US Airways, which hoped to merge with United in 2001, wants to emerge from bankruptcy by the end of March.

United's international bookings are down 40 percent and the No. 2 airline has warned of possible liquidation in filings in U.S. Bankruptcy Court in Chicago.

UAL Corp., United's parent, reportedly is rethinking a plan to create a low-fare carrier, code-named "Starfish," to compete with successful discount carriers Southwest Airlines and Jet Blue. United Monday asked Judge Eugene Wedoff to abrogate contracts with its five unions so it can impose cuts to save $2.56 billion a year so it can continue to receive debtor-in-possession financing. Lenders have demanded the cuts be in place by May 1.

Higher fuel prices cost United an extra $300 million last month and the airline is cutting its flight schedule 10 percent to 12 percent because of the war. United CEO Glenn Tilton told employees in a taped message the airline would continue to refine its plans as the war develops.

A spokeswoman Association of Flight Attendants said Tilton must come up with a plan "that's going to be viable for United moving forward, out of bankruptcy and that enables it to successfully reorganize."

AFA members in their uniforms will push for government aid to the airline industry Monday in an "Airport Day of Action.

"We must not let the United States airline industry fail," AFA said.

American is burning through its cash and may be next carrier to file for Chapter 11 protection from creditors.

"If there is a terrorist attack involving an aircraft similar to Sept. 11, then just about the entire industry will find itself in bankruptcy," Mark Streeter, a JP Morgan analyst told the St. Paul Pioneer Press. Continental, announced 1,200 layoffs this week, and is on the ropes. America West, Delta, Northwest and Alaska Airlines all are operating in the red.

The Air Transport Association, a trade association for U.S. carriers, estimated airlines will lose $4 billion because of the war and more if there is a terrorist attack or hijacking.