JAL Bailout, UAL Cuts 600 Jobs - Airline Industry in Trouble
Japanese Airlines (JAL), which is currently experiencing significant losses, will be bailed out by the Japanese Government by up to $1 billion in state aid. The dire situation of JAL is just the latest in a string of news from the ailing airline industry, which faces difficult times.
United Airlines (UAL) has also decided to take measures to counteract the effects of the economic crisis by cutting 600 flight attendant jobs. UAL already eliminated 1,550 flight attendant jobs last year due to economic difficulties. Its competitors, Delta Airlines and American Airlines have also announced plans to reduce jobs.
These airlines, however, have not taken actions quite as drastic as their British counterpart. After reporting a record loss of $942 million in May, British Airways sent a letter to their staff in June asking them to work unpaid or take unpaid leave for anywhere from 4 weeks to 1 year. The airline plans to fire 2,000 employees and hopes for 2,000 "voluntary redundancies."
Giovanni Bisignani, the Director General and CEO of the International Air Transport Association (IATA), outlined the dire state of the air transport industry at IATA's Annual General Meeting in Kuala Lampur in June 2009.
"Numbers can tell powerful stories. US$10.4 billion (1) is the amount we lost last year. The ground shifted and our industry was shaken. Skyrocketing oil prices dominated the first half of 2008. Global recession was the story of the second half," [Bisignani said.]
Bisignani also noted that the airline industry is forecasted to lose another $9 billion in 2009, with any benefits gained from lower fuel prices counteracted by a drop in demand.
According to Antonio López de Avila, director of the IE Business School’s master’s program in tourism management, the sector has not experienced such a crisis since the terrorist attacks of September 11, 2001. “September 11 was a scare -- a little pause to see what was happening. Above all, it was the U.S. airlines that suffered a lot. [After] 9-11, people weren’t flying because they couldn’t fly. Now, it’s because they don’t want to fly.”