Sunday September 16 2:18 AM ET

Continental Cuts 12,000 Jobs Amid Crisis By Deborah Cohen

CHICAGO (Reuters) - Continental Airlines Inc. said on Saturday that it was laying off 12,000 staffers and warned it could file for bankruptcy as it and two other top 5 U.S. carriers slashed flight schedules in the fallout from the air attacks on the World Trade Center and the Pentagon (news - web sites).

The industry's deepening crisis led Gordon Bethune, the chief executive of Houston-based Continental, to predict 100,000 airline job losses worldwide and prompted the Bush administration to announce it will hold urgent talks with carriers about their financial woes next week.

Without financial help from the government, Continental said a late-October reorganization of the company under protection from the bankruptcy court would be ``prudent.''

Northwest Airlines, the No. 4 U.S. carrier, and UAL Corp.'s United Airlines, the second-largest, said they would cut schedules by 20 percent, along with Continental, the fifth-largest airline.

Tuesday's air attacks, which left thousands entombed in the rubble of the World Trade Center's twin towers, shut down the nation's aviation industry for nearly three days and have prompted Americans to curtail travel plans sharply. The airline business, which will now also have to increase spending on security measures, was already reeling because of the economic downturn, surging labor costs and high fuel prices.

``The U.S. airline industry is in an unprecedented financial crisis,'' Bethune said in a statement. ``Our industry needs immediate congressional action if the nation's air transportation system is to survive.''

The layoffs announced by Continental, which represent 21 percent of its staff of more than 56,000 people, are likely to be followed by job cuts elsewhere. Minneapolis-based Northwest Airlines, which has 53,000 employees, said it would review its overall staffing needs by next week and bring in long-term scheduling cuts by Oct. 1.

Among other major U.S. airlines, the world's largest, AMR Corp.'s American Airlines, said it was reviewing staffing, and the third-largest, Delta Air Lines Inc., said it could not rule out layoffs.

Delta said it had operated 1,500 flights by 9:45 p.m. EDT on Saturday. This represents about 60 percent of its normal daily schedule.

INDUSTRY LOSSES PUT IN BILLIONS

The Geneva-based International Air Transport Association, which has 266 member airlines, has estimated that this week's immediate revenue losses and extra costs for the industry could total $10 billion.

White House spokesman Ari Fleischer (news - web sites) said on Saturday that President Bush (news - web sites) was ``concerned'' about the financial problems facing commercial carriers in the wake of Tuesday's attacks -- which used hijacked planes from American Airlines and United Airlines.

White House spokeswoman Claire Buchan said that Transportation Secretary Norman Mineta (news - web sites) would meet with airline executives as early as Monday.

``The airlines were facing serious problems before these incidents, and now they're facing problems not of their own making. So we're obviously pretty sympathetic to that and looking at it very closely,'' Buchan said.

Several top-ranking members of the House of Representatives are pressing for passage of legislation authorizing $2.5 billion in grants and $12.5 billion in loan guarantees to aid all U.S. airlines that have sustained losses, not just the two that lost a total of four planes in the hijackings.

But so far the White House has balked at endorsing the aid package, which supporters say would help mitigate the industry's losses and send a signal to financial markets, reopening next week, that Congress will try to cushion the economic effects of the devastating assaults.

Separately, James Hoffa, president of the largest union of transportation workers in North America, has requested a meeting with Bush to ``ensure the stability of the nation's air transportation system,'' the Teamsters said in a statement on Saturday.

Continental's Bethune said the industry had lost an additional $1 billion on top of substantial, earlier 2001 losses as flights were grounded nationwide.

Continental itself is losing $30 million per day and could be forced to file for bankruptcy by late October if Congress does not quickly provide aid, he warned.

``It's a sad day for us,'' he said.

Continental, which forecast a 50 percent drop in travel demand, was one of only two major carriers that had been expected to post profits in 2001 before the air attacks.

Air traffic remained spotty within and outside the United States on Saturday as airlines throughout the world slowly ramped up service four days after the attacks in New York and Washington grounded all U.S. flights and led to stepped-up security measures around the globe. The major carriers were aiming to have roughly 50 percent of their scheduled planes in the air.

FLIGHT SCHEDULES STILL HOBBLED

Security at airports around the globe remained tight as stranded Americans, some grieving for loved ones, lined up to head home. The resumption of flights was hampered by stepped-up safety measures in the United States and elsewhere.

The Federal Aviation Administration (news - web sites) instituted a host of stopgap safety measures in the United States earlier this week, including the elimination of curbside luggage check-in and the prohibition of all but ticketed passengers beyond security checkpoints.

In the United States and elsewhere, passengers were prevented from carrying even nail files, scissors or pocket knives on board. Airlines removed metal cutlery from first class, replacing it with plastic.

``I just want to go home,'' New Yorker Peter Strastny said at Vienna airport. His apartment was just a few blocks from the World Trade Center, which was destroyed by two of the four hijacked jets.

Most large U.S. airports were open, including the world's busiest, Hartsfield International in Atlanta, O'Hare in Chicago and Logan Airport in Boston, which had been closed Friday. Ronald Reagan (news - web sites) Washington National Airport, which sits near the Pentagon and the White House outside the U.S. capital, remained closed.

In the United States, travelers were advised to check in for their flights at least two hours before departure, while in Europe the standard two-hour check-in was raised to three hours.

``If it's necessary, we've just got to cooperate,'' said an American vacationer waiting for a seat at London's Heathrow, Europe's busiest airport. ``It's all very orderly.''

Continental's Bethune said the new restrictions meant that passengers were changing the way they look at air travel.

The airline has seen a ``drastic'' drop in bookings in the past four days, he said. ``Behavior is changing in front of our eyes,'' he said.

-- Anonymous, September 16, 2001