2004-9-30
This is Gwen Outen with the VOA Special English Economics Report.
Many airline companies are finding it difficult to make a profit.
The International Air Transport Association says it expects the
industry to lose up to four thousand million dollars this year. Yet
air travel continues to increase. So what is the problem?
Fuel prices are high. But many airlines are finding that their
way of doing business is also too costly.
U.S. Airways, for example, wants a Bankruptcy Court judge to
order temporary pay reductions for many of its workers. The company
also plans to cut pay for its managers by a reported twenty percent.
U.S. Airways is under protection from its creditors for the
second time in two years. It says it could go out of business in
February. U.S. Airways is the seventh largest airline in the United
States.
The third largest, Delta, is trying to avoid bankruptcy. Delta
Airlines announced a ten percent pay cut for its top officials and
some other workers.
This week, Delta reached an agreement with the labor union for
its pilots. A lot of them have taken early retirements. To avoid a
shortage, the deal permits newly retired pilots to return to work.
In return, Delta agreed not to take any immediate steps to cancel
the retirement plan for its pilots.
United Airlines, the second largest carrier, is under bankruptcy
protection. It wants to end its pension programs and replace them to
save money. But the existing plans are owed thousands of millions of
dollars which United wants the government to pay. How much the plans
are owed is in dispute.
Not all airlines are in trouble. Low-cost airlines like Southwest
and JetBlue remain profitable. These smaller airlines provide
limited services and usually do not serve meals on their flights.
Some major airlines have tried to raise their prices in recent
months. American Airlines, the world's largest carrier, started such
an effort last week. But the low-price competition has made it
difficult for traditional airlines to charge more.
Airlines in the United States are not the only ones facing such
competition. The Italian airline Alitalia is close to seeking
protection from its creditors. Alitalia has lost market share to
companies like Ryanair of Ireland which offer low-cost travel in
Italy.
Some people believe that airlines should combine their businesses
to cut costs. But some costs cannot be controlled, like oil prices
which reached fifty dollars a barrel this week.
This VOA Special English Economics Report was written by Mario
Ritter. This is Gwen Outen.