Thousands more jobs go in travel industry

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Travel industry braced for more cuts after First Choice cull

Thousands more jobs were lost in the airline and travel industries yesterday as another carrier went bust and a backlash developed against the state hand-outs given to the ailing national operators of Switzerland and Belgium.

Further alarm was caused after the Irish government warned that its flag-carrier Aer Lingus could run out of cash "within months", making an emergency aid package likely for the state-owned airline too. Aer Lingus also cut 700 jobs.

Meanwhile the impact of the terrorist attacks on America hit home on the travel industry as First Choice Holidays, the UK's fourth-biggest tour operator cut 1,100 jobs and reduced the number of holidays on offer next summer by 20 per cent. Its winter programme has been reduced by 15 per cent. First Choice added that the 11 September attacks had cost it £10m in lost business.

In Amsterdam, KLM said it will scrap 2,500 jobs, drop routes and use smaller planes as it trims 15 per cent of seating on flights because of weaker demand. Europe's fourth- largest airline is cutting 9 per cent of its workforce as passenger traffic dropped 8 per cent in September. Staff are also being asked to accept pay cuts and shorter hours.

BAA, the owner of Heathrow, Gatwick and Stansted airports, said profits could fall by 20 per cent this year as a result of a decline in passengers. Traffic at Heathrow fell by 19.7 per cent in the three weeks following the US attacks.

As Swissair resumed flights yesterday after receiving a $280m (£190m) bail-out from the Swiss government and Sabena of Belgium continued to operate with the aid of a €125m (£80m) loan, the low-cost Irish carrier Ryanair lodged a complaint with the European Commission. A spokesman for Ryanair, whose chief executive Michael O'Leary is a firm opponent of national airlines receiving government assistance, said the company was seeking advice on where to initiate legal proceedings in Europe. "The financing move is entirely unjustified and it's unfair that Sabena should receive funding from the Belgian government when all other airlines are struggling to make ends meet. It can't continue and we intend to take action in Europe."

The European Commission called in Switzerland, even though it is not a member of the union, to explain the payment to Swissair.

The Swiss ambassador, Dante Martinelli, insisted it did not break a forthcoming transport agreement with the European Union that strictly controls state aid to airlines. Mr Martinelli said after a meeting with Francois Lamoureux, head of the Commission's transport section "It's not a matter of state aid to a company to allow it to develop. It's a loan, limited in aim and limited in time."

The plight of Aer Lingus was spelt out by Ireland's Public Enterprise Minister, Mary O'Rourke, who told the Irish parliament that the 11 September attacks had pushed the carrier into a "crisis situation" with bookings on its US routes down by 80 per cent. Aer Lingus has about $215m in cash which will be "fully depleted" by early 2002, she said. Mrs O'Rourke said the number of US tourists visiting Ireland in the final four months of this year will probably be "less than half the expected 300,000".

Aer Lingus, which relies on the north Atalntic for 60 per cent of its profits, is now expected lose $81.2m this year as bookings from the US plunge.

De Vere Group, the leisure company that had hoped to host the Ryder Cup, cut 40 jobs and warned that second-half operating profits would be lower following the attacks. The group said the last-minute postponement of the golf tournament at its Belfry Hotel, near Birmingham, had cost it £700,000. Separately, ebookers, the online travel agency, said it would cut its 700-strong workforce by between 10 and 20 per cent. Meanwhile the Belgian carrier City Bird was declared bankrupt in a Brussels court after the tour operator Thomas Cook refused to purchase the low-cost airline. City Bird operated eight aircraft and 15 flights a day.