Fuel prices, economy squeezing airlines
About 4,000 people have taken a severance package at Delta Air Lines, a spokeswoman said. (Al Behrman/Associated Press)
The failed buyout of a British airline, a report that employees are flocking to leave a major U.S. carrier and a forecast that several U.S. airlines will fail by 2009 provided more evidence Friday of the troubled state of the air travel business.
About 4,000 people have taken a voluntary severance package at Delta Air Lines Inc. of Atlanta, double the number expected when the airline offered the buyout to about 30,000 employees in March, spokeswoman Betsy Talton said Friday.
The company had hoped to cut 2,000 operating, administrative and management jobs when it announced the buyout, but it said it would accept more requests if people wanted to leave.
Most of the employees will leave Delta in the fall, and the number is not final, Talton said. Delta had just over 55,000 full-time employees at the end of 2007.
Higher oil prices raise airline costs by $30 billion US
A study by AirlineForecasts and the Business Travel Coalition released Friday predicts that several large and small U.S. airlines won't be able to meet their obligations to creditors by the end of this year or early 2009.
The problem is fuel charges, the report said. Assuming oil at $130 US a barrel, annual costs for airlines will rise by $30 billion US while carriers will only make an extra $4 billion from higher fares and fees.
"The implication of this alarming trend is that several large and small airlines will ultimately end up in bankruptcy, and of those, some will be forced to liquidate," a news release about the report said.
Silverjet buyout fails
Meanwhile, 300 employees of British business-class airline Silverjet have been laid off after a proposed buyout failed, according to Begbies Traynor, the administrator who took over the company. Silverjet went into administration on May 23 after a lender wouldn't provide extra cash.
A company called Kingplace Ltd. based in Ireland was going to buy Silverjet, but that deal failed Friday.
"Kingplace is no longer in a position to acquire Silverjet as a going concern," Mark Fry, a senior partner with Begbies Traynor, said Friday.
"As a consequence, we have today had to make the entire workforce formally redundant, in line with our legal obligations as administrator."
Major airlines have recently announced cuts in routes, plane orders and jobs as record fuel prices raised costs and a weak economy hurt ticket sales.
US Airways Group Inc. said Thursday it would cut U.S. flights by up to eight per cent, shrink its fleet, eliminate 1,700 jobs and charge passengers $15 US to check their first bag.
"We must write a new playbook for running a profitable airline in this new and challenging environment," chairman and CEO Doug Parker said in a statement.
With files from the Associated Press
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