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 line.”

FMI: www.cessna.com, www.aa.com, www.ual.com, www.usairways.com