European airlines make emergency cuts FRANKFURT, Germany (AP) =97 Europe's airlines are reducing service to the=20 Middle East and flight schedules overall in an attempt to weather a drop in= =20 passengers due to war in Iraq. Even so, industry observers say the big=20 European carriers generally are in better shape to face the fallout than=20 their U.S. counterparts. A plunge in passengers after the Sept. 11 attacks= =20 and the slack global economy have already made European airlines leaner=20 than they were going into the first Gulf War 12 years ago: Payrolls have=20 been cut, planes idled and cash reserves increased in recent months. While= =20 Lufthansa, British Airways and Air France have aggressively streamlined,=20 U.S. airlines are still struggling to wring excess costs and capacity out=20 of their system. "The airlines have known this was likely to happen for=20 quite a while," said Dominic Edridge, an analyst at Commerzbank in London.= =20 "The European airlines at least have got their cost bases in order, so that= =20 they've been making money while they've been able to in the past 12=20 months." That can't eliminate huge uncertainty about how long war may last,= =20 and how business and vacation travelers will respond =97 especially on key= =20 routes to North America. But airline balance sheets reflect an 18-month=20 struggle to cope with weaker demand, particularly a drop in the lucrative=20 business-class travelers who fatten airline profits in good times. The European airlines' preparedness is a contrast to their problems after=20 the surprise 1990 invasion of Kuwait by Iraq, which led to the 1991 Gulf=20 War. Lufthansa, which reported a profit of 717 million euros ($760 million)= =20 for last year, cut employee costs right after Sept. 11, piled up over 2=20 billion euros in cash and idled 31 planes this year. British Airways has=20 more than 1.8 billion pounds ($2.8 billion) in cash on its balance sheet,=20 Air France more than 1 billion ($1.05 billion) and KLM some 800 million=20 euros ($840 million). That's important because airlines, with high fixed=20 costs, can quickly burn up their available cash during a downturn. British= =20 Airways, most vulnerable to a trans-Atlantic slowdown because it gets=20 roughly a third of revenue from those routes, has trimmed seat capacity by= =20 four percent for April and May. That comes after BA said it had cut 1=20 billion pounds ($1.6 billion) in overhead over the previous year. It earned= =20 13 million pounds ($21 million) for the last three months of 2002. Air France has trimmed its summer schedule, idled planes and increased=20 ticket prices to cover higher fuel costs. "Without question, the Americans are in a much worse position on the=20 whole," said aviation analyst Nick van den Brul at BN Paribas. "Traffic has= =20 really fallen off after 9-11 and they haven't cut costs fast enough and=20 they haven't cut capacity fast enough." The reason, analysts say, include=20 the $5 billion government bailout plus $10 billion in loan guarantees the=20 airlines got after the attacks. That, and the chance to restructure under=20 U.S. bankruptcy law while they keep flying, have proved a disincentive to=20 slash costs and give up marginal routes. Strong unions also mean higher=20 labor costs for U.S. airlines. The European Union, in contrast, blocked=20 Belgium from rescuing its Sabena airline, though EU officials are now=20 discussing easing competition rules barring government airline aid due to=20 the Iraq war. European airlines are also expressing concern about the=20 impact on customers of U.S. data requirements imposed as part of the war on= =20 terrorism. Airlines must turn over personal information such as meal=20 preferences which can reveal religious or ethnic affiliation. Airlines have= =20 complained to European Union officials, saying they are put in the position= =20 of either violating U.S. rules or EU rules on privacy protection. BA and=20 Lufthansa are among those telling their passengers of the data requirement.= =20 While the impact is hard to gauge precisely, some travelers are clearly=20 annoyed, Lufthansa spokesman Thomas Jachnow said. "We have some irritation= =20 on the customer side, and a lot of questions to answer," Jachnow said. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.thehummingbirdonline.com TnT Webdirectory: http://search.co.tt *********************************************************