This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx Airlines, Already Ailing, Cut Flights March 21, 2003 By EDWARD WONG With the start of the second Persian Gulf war, airlines around the world - already battered by the industry's worst downturn - cut back even more on their schedules yesterday, especially on flights to the Middle East. Some carriers also said they would have to cut costs by laying off workers or reducing pay. Large American companies like Pfizer and Tyson Foods said they had clamped down on employee travel. Many unfazed air travelers took to the skies, though, having expected for days that the American invasion of Iraq could start at any time. But some passengers said they had seriously thought about changing their plans as war appeared imminent. "I would have canceled my trip, but I would have lost my ticket, so I'm going," said Diane Clark, a 55-year-old nurse and missionary who was calmly eating lunch yesterday at O'Hare International Airport in Chicago before flying to Ethiopia. "After listening to the news, I probably would have waited to take this trip." Ms. Clark said she had paid $1,600 for her ticket on British Airways. Airlines said bookings had already fallen sharply compared with those at this time last year. A lawyer for US Airways, which hopes to emerge from bankruptcy protection in 10 days, told a judge yesterday that bookings had dropped by 20 percent in the last week. The speed at which traveler confidence returns will depend on the length of the war and whether terrorist attacks occur, executives and industry experts said. Lufthansa Airlines, the German carrier, suspended service for two days to Kuwait, Tel Aviv and Amman, Jordan. Air France cut a flight to Amman from Paris. KLM, the Dutch carrier, said it was canceling flights between Amsterdam and Kuwait today and Sunday, and two flights to Amman today. It said it would fly to Tel Aviv only in daylight hours. Singapore Airlines took a more sweeping approach, saying it will cut 65 flights a week from late March to May 31 to cities in the United States, Europe, Asia and Africa. American Airlines, the world's largest carrier, is likely to make changes to its international schedule, said Todd Burke, a company spokesman. In total, more than a dozen airlines have cut their schedules since Monday night, when President Bush issued a 48-hour ultimatum to Saddam Hussein to leave Iraq. The opening salvo against Baghdad on Wednesday night sent airline planners back to their computers, scrutinizing where passenger bookings had dipped and which flights could be cut. The International Air Transport Association said bookings would fall about 10 percent now that the war had started. Industry analysts said airlines in the United States would probably cut capacity by at least 10 percent. United, operating under bankruptcy protection, has said it may have to cut its capacity 10 percent to 12 percent. Kurt Ebenhoch, a spokesman for Northwest Airlines, said schedule changes were "a matter under study here." Northwest is suspending through Sunday its daily flight from Amsterdam to Bombay. The carriers took similar actions during the first gulf war in 1991. A half-year passed before capacity returned to prewar levels, said Michael Allen, chief operating officer of Back Aviation Solutions, an airline consulting company based in New Haven. "What you're going to see is parking of airplanes by each of the Big Six carriers, and they're going to pull down capacity," Mr. Allen said. "They'll also have to make judgments in terms of which markets will be more affected. For example, areas like the trans-Atlantic will be disproportionately affected because there will be more concern in that area." In February 1991, during the first gulf war, trans-Atlantic traffic plummeted 44 percent from the month a year earlier, and travel across the Pacific fell 21 percent, according to the Air Transport Association, the industry's main trade group in this country. The drop is likely to be less this time because the weak economy has already slowed travel for nearly three years and because travelers are relatively inured to the threat of a terrorist strike after the Sept. 11 attacks in 2001. With the price of crude oil in sharp fluctuation, almost all the big carriers have hedged their fuel costs, though to varying degrees. Southwest Airlines has hedged all of its fuel costs this quarter, with 85 percent capped at $23 a barrel for oil. American has 40 percent hedged, and United none, according to a recent report from Susan Donofrio, an analyst at Deutsche Bank. The major American carriers could lose up to $10.7 billion this year and be forced to cut 70,000 jobs if there is a prolonged war, the Air Transport Association said. US Airways said in bankruptcy court yesterday morning that it might have to impose a 5 percent wage deferral on its workers now that the war had begun. The company's lead lawyer, John W. Butler Jr., said the airline might also have to reduce its fleet below the minimum level of 279 planes mandated by its contract with the Air Line Pilots Association. To make those cuts, US Airways would have to invoke the so-called force majeure clause of the contract, which gives the company leeway to enact drastic operational changes to cope with a war, terrorist attacks or acts of God. Mr. Butler also said that US Airways would miss a $27 million lease payment today on Airbus planes and that it had reached an impasse in negotiations with the pilots' union over pension obligations. The airline will not be able to emerge from bankruptcy protection until it resolves those obligations. Air Canada said yesterday that it would cut 3,600 jobs by the end of the year. On Wednesday, Continental Airlines said it was eliminating 1,200 jobs, perhaps the prelude to a wave of layoffs among the main United States carriers. At many large airports, police officers and security guards conducted random searches of arriving cars. Some passengers stared as teams of guards marched through the terminals with a sense of purpose not seen since the days after the Sept. 11 attacks. Signs had been put up overnight warning travelers to expect heightened security measures. At New Orleans International Airport, a group of 35 clean-cut young men dressed in red, white and blue windbreakers stood restlessly in line at a United Airlines counter. The young men, baseball players from the University of Illinois at Chicago, were on their way home after playing in Louisiana. Their coach, Mike Dee, said they might start traveling more by bus if flying proved perilous in the weeks to come. "I think any time you're in charge of 35 people, particularly young people, sure you're concerned," he said. "You'd hate to have people afraid to do what's normal, but we certainly learned two years ago that things do change." http://www.nytimes.com/2003/03/21/business/21AIR.html?ex=1049275111&ei=1&en=b77a0e4932d7d3d2 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company