Aviation Still Facing A Rocky Economic Road
The economic doldrums can't seem to
let go of the aviation business, with Cessna and American Airlines
both announcing additional job cuts, and Delta and US Airways
saying they may not be too far behind.
Two reports in Bloomberg News point up the continuing bad news
for our business. Textron announced Friday that it will shed 1,300
more jobs from its Cessna division, as order cancellations continue
to pile up. That's on top of the loss of 6,900 jobs previously
announced, bringing the total job cuts at Cessna to 8,200. Chief
Executive Officer Lewis Campbell said there could be "well over"
150 order cancellations in May as the recession and accompanying
credit squeeze has caused demand for business jets to plummet.
Textron, Cessna's parent company, is selling off assets, closing
its financing arm, and cutting the dividend to conserve cash.
The airlines are not fairing much better. American announced
Friday that it will slash 1,600 jobs from its payroll due to
slumping demand for air travel and all airlines look to cut seating
capacity. Bloomberg reports that Delta may soon follow suit, and
U.S. Airways is looking for 400 flight attendants to take
involuntary leave or it will have to resort to layoffs. The moves
come as airlines cut fares along with capacity in an effort to
attract the declining number of travelers, particularly in the
expensive seats at the front of the cabin on overseas routes.
Jeff Brundage, senior vice president for human resources at
American, said in a message to employees “These are trying
times in the airline industry and our economy. The recession has
taken a disproportionate toll on airlines and there is no easy way
to announce yet more bad news.”
United employees may be able to breathe a little easier. The
nation's 3rd largest airline is making daily assements of capacity
on its routes, but CEO Glen Tilton said the airline is "not
predisposed" to making cuts at this time.
Financial analysts continue to predict things will get worse
before they get better, particularly in the airline sector. Robert
Mann, who owns the airline consulting firm R.W. Mann & Co. in
Port Washington, New York, told Bloomberg, “Unless there is a
huge upturn in business travel propensity and spending, it’s
inevitable there will be further cutbacks in capacity on the
international side. You can clearly fill up the airplane with cheap
fares, but that doesn’t get you the economics you want. The
maximum revenue is just less than you’d hoped. It
doesn’t necessarily get you to a positive bottom