The heads of British Airways and Virgin Atlantic are to meet Stephen Byers, Secretary of State for Transport, this morning to press for emergency aid amid fears a total of 12,000 jobs are to be lost.
Yesterday, Virgin laid off 1,200 staff and cut its seat capacity by a fifth in direct response to last week's terrorist attacks on America. BA is expected to announce a similar level of service reductions later this week, with as many as 10,000 job losses feared. The position has also renewed fears over the future of the Concorde fleet, which was due to take to the skies for passenger services again within weeks.
US Airways last night announced 11,000 job losses and a 23 per cent cut in capacity and American Airlines, Delta and North West are expected to announce similar cuts in the next week. Analysts are now forecasting 100,000 job losses in the US airline industry this year and combined losses of $5bn$7.5bn (£3.4bn£5.1bn).
Sir Richard Branson, the Virgin Atlantic chairman, and Rod Eddington, BA's chief executive, will tell Mr Byers that the economic consequences for the airline industry of last week's attacks justify government financial support. They will argue for the same kind of support as the American government has indicated it will give its carriers an aid package that could run into hundreds of millions of dollars.
Government sources insisted the talks would focus mainly on enhanced security measures that British carriers could take and indicated that any plea for direct assistance would receive short shrift. "They haven't had any of their planes blown up and offering financial aid would open a Pandora's box," said one Whitehall source.
Virgin is to ground five of its 747-200 jumbo jets, suspend services to Chicago and Toronto, and reduce frequencies on its New York route from five to four a day from next month. The airline will also use smaller Airbus A340 aircraft on its American services, which will reduce the number of passengers it can carry.
A spokesman said compulsory redundancies could not be ruled out. But Virgin hoped to redeploy as many of the 1,200 staff as possible in its leisure and health club division, Virgin Active, which is creating 700 new jobs over the next 12 months in a £30m expansion.
Sir Richard said: "We have enough cash to see Virgin Atlantic through the winter months and hopefully come out stronger than before. We had a similar situation during the Gulf War." Referring to the need for government support, he added: "It is important to move quickly to make sure we are still here in 20 or 30 years."
A Virgin source added: "We accept it is our job to match the size of the business with passenger demand but there are a number of economic consequences of last week's terrible events, not just in terms of security, which we need to discuss with the Government."
The trade unions also urged the Government to give financial support. Chris Darke, general secretary of the pilots' union, Balpa, said: "Airlines in the US are to receive substantial funding from the US government to help them through this difficult period. British airlines, both large and small, will be hit too and will need similar support."
Tim Lyle, an official with the Transport and General Workers' Union, said after a meeting between BA management and trade unions: "If the Government has provided money to bail out the farmers then it ought to be ready to do the same for the airline industry. There is no doubt there is going to be a major impact on BA's business and it is going to last a long time. Far more people could lose their jobs."
Plans to resume Concorde services next month may be shelved. BA sources said the senior management group formed to assess the commercial impact of last Tuesday's atrocities would review the decision to restart the flagship supersonic services.
Some managers argued yesterday that a failure to proceed with the limited Concorde services across the Atlantic would be a sign that BA had bowed to terrorism. But others said Concorde could fall victim to a general reluctance to fly caused by the atrocities in America.
BA had said three of its planes would start a daily return service from Heathrow to New York next month. Air France, which has five Concordes, was expected to resume flights in November.
BA shares rallied yesterday, climbing 7 per cent, after having fallen by 40 per cent since last Tuesday. But US airline stocks took a hammering when Wall Street reopened, with their combined market value falling by $6bn (£4.1bn).
Shares in Continential Airlines fell almost 50 per cent Aat one point yesterday. United Airlines and American Airlines, whose aircraft were used in the attacks, fell 39 per cent and 37 per cent, respectively. Shares in Delta, the third-biggest US carrier, fell by 44 per cent.Reuse content