The move comes as a surprise as global tourist inflow is expected remain low during the traditional peak season of October-March due to the global recession, swine flu fear and drought in several parts of the country, according to tour operators.

Also, airlines are under pressure to hike fares due to increasing jet fuel prices that has surged to nearly $150 levels over the past two years. Fuel constitutes 45% of an airline’s operational cost. Any hike in fares may impact air travel.

SpiceJet, which posted Rs 26-crore net profit in the first quarter, will hire 84 cabin crew and 24 pilots this calendar. The airline will increase capacity in non-metro cities and add four new aircraft to its fleet this fiscal, CEO Sanjay Aggarwal said.

IndiGo, the country’s largest low-cost carrier with a market share of 14%, will hire 50-60 pilots and add five aircraft to its fleet of 19. It will also be hiring ticketing staff and cabin crew, said a senior IndiGo official who requested not to be named.

Paramount Airways will hire 80 foreign and 200 local pilots over the next one year, as reported by ET recently. The Chennai-based airline, which closed a Rs 4,000-crore fleet order in June, is adding 10 aircraft to the existing fleet of six and will increase services to 2,500 flights per month by October.

GoAir inducted three new aircraft between March and June, increasing its fleet size to eight planes.

According to consultants, it’s a good time to hire as salary levels have gone down with full carriers Jet , Kingfisher Airlines and Air India staying away from job market. Airlines are now offering packages of less than Rs 4 lakh per month to domestic pilot, much below the industry benchmark of Rs 6 lakh.

Full carriers, meanwhile, are trimming their operations, retrenching employees and cancelling aircraft orders to stay afloat after record losses in the first quarter.

Naresh Goyal-promoted Jet Airways, which has reduced capacity by 20% on domestic routes, has issued termination notices to 43 cabin crew on probation and terminated contracts of 110 employees. It reported a loss of Rs 225 crore in the first quarter ended June.

Vijay Mallya’s Kingfisher Airlines recently warned its 6,000 employees of a delay in salary payment after reporting a first quarter loss of Rs 240 crore. It has trimmed its fleet to 69 from 89 aircraft to cut costs.
National carrier Air India is waiting for a government bailout after running up losses of Rs 7,200 crore in the last two years.

Meanwhile other crew members have been asked to participate in a “sympathy strike” between 5:30 am and 8:30 am, Cockpit said on Monday.

The airline flies between most major German cities and also favourite Teutonic vacation destination such as Mallorca. Early on Monday morning airports across the nation reported heavy delays and several cancellations due to the strike.

One flight from Munich to Mallorca was cancelled while flights from Düsseldorf, Cologne, Hamburg, Hannover, Saarbrücken and Stuttgart were delayed by several hours, airports reported. Other airports in Dortmund, Münster, Paderborn and Karlsruhe were also affected by the strike, which is set to last until 9:30 pm.

Negotiations between the airline pilots and employers have been running since January 2009, but collapsed in February. In March Cockpit members voted by a 98.7-percent majority to state strikes in their efforts to gain salary increases.

The airline said strikes were inappropriate given the economic situation of the air travel branch. Air Berlin has offered to increase 336 LTU pilots’ salary by two percent, in addition to an inflation adjustment and job security until the end of 2010.

But Cockpit wants a five percent raise for the pilots. Talks are scheduled for Tuesday.

The cuts will reduce the airline’s administrative staff from about 5,800, according to Kojiro Waki, a JAL spokesman.

Japan Air will form a new department called the “Customer Experience Division” to improve service and merge three subsidiaries to create one subsidiary called JAL Sky. The JAL Sky unit will be in charge of airport operations and service, according to a statement released on Aug. 28.

The airline, which blamed the closure on a slump in international travel demand, said the base was no longer viable.

The Australian carrier had previously embarked on a large recruitment drive for offshore cabin crew in a bid to slash labour costs and dilute the influence unions have over its 35,000-strong workforce.

However, Qantas has now decided to end its contract with the base that employed 123 Thai nationals to work as cabin crew on the airline’s international flights.

The Flight Attendant’s Association of Australia said that the base closure was a stark reminder that long-haul cabin crew have little job security in today’s economic climate.

Qantas has so far resisted axing cabin crew from its Australian-based workforce, although it has introduced cost cutting measures such as leave-without-pay.

Several years ago, the airline and union struck a deal to have no more than 25 per cent of international cabin crew made up of foreign nationals.

The union has a longstanding opposition to the offshoring of long-haul cabin crew jobs and Qantas employs a total of about 4500 international flight attendants.

“I wish to reiterate that this announcement of the closure of Bangkok, further demonstrates the serious job security situation for long-haul crew,” said union’s secretary of the international division, Michael Mijatov.

“This announcement by Qantas should demonstrate to even those that are most sceptical amongst us, that the current situation facing us is serious.”

Qantas also has long-haul cabin crew bases in London and Auckland. Crews based in New Zealand’s largest city typically work 30 per cent more hours on half the base pay of their Australian counterparts.

Qantas has been pulling almost every lever to cope with a dire short-term outlook, including grounding planes, delaying and cancelling deliveries of new aircraft, and raising $500 million from investors to keep its investment-grade rating.

In the past 18 months, the airline has already laid off up to 3250 employees and just last week it announced $1.5 billion in spending cuts over three years, including $500 million this financial year. It follows $3 billion in cuts over the previous five years.
Last week, Qantas also announced its first half-year loss in six years as it suffered from big falls in demand for premium seats on international routes.

Its rival Kingfisher Airlines seems to have learnt a lesson from the whole episode. So, now when Vijay Mallya’s airline is sacking people, it is being done in a quiet and systematic manner.

An employee at Kingfisher’s reservation department who was fired this month told DNAthat the FSC laid off around 90 cabin crew, four sales personnel from Delhi and several other staff over the last two months.

“I was asked by the HR (human resource) to resign. They told me that if I didn’t, then they would terminate me. This is what they are doing with other employees, too. They create a situation where employees are forced to quit,” said the former employee of the airline.

Poor performance is generally used as an excuse to get rid of an unwanted worker.
She said morale of the employees was very low as they have not received any increment or promotion in the last one year.

According to her, integration of Kingfisher and G R Gopinath-owned Deccan
Air has also resulted in over 400 employees leaving the company.

“The company has been cutting its employee strength, but in a phased manner, to avoid coming under the media glare. Instead of firing staff in one shot, they are letting go one or two persons a week,” she alleged.

And such sporadic firing has been going on at the airline for some time to align reduced capacity with workforce. The full-service carrier, which has moved 70% of its capacity to budget class, slashed 20% capacity in FY09.

Sources at Jet Airways also revealed that the airline was reducing staff to cut personnel costs.

Responding to queries on the gradual lay-offs, a Kingfisher spokesperson said; “There have been no lay-offs of 90 cabin crew as alleged by your source. This is untrue and we completely deny it. I also categorically state that there have been no lay-offs in any department”.

He further said the information on four resignations from the Delhi team was untrue.
“More importantly, as I mentioned, it may be extremely tempting to view normal attrition with a different lens just because the entire aviation sector is in turmoil,” he said.

The extra carrier means about 130,000 more passengers each year will be able to fly to destinations including Turkey and Egypt.

Jet2 will initially base one aircraft at the airport, making nine flights each week to seven destinations.

Airport officials said the 10-year deal was a major coup.

‘Positive indicator’

Jet2 will start with a Boeing 757, with further investment and growth planned over the next three years.

Eighty of the new jobs will be based at the airport, with the rest spread across the region.

The airport’s managing director Penny Coates said: “We have been talking to Jet2 for some time about a base here.

“They have got some great destinations and are a good brand.

“This news is a positive indicator for the future and puts East Midlands Airport in a strong position as we continue to extend and develop our route network.”

“This particular recession is a more severe test than any other downturn I can recall in the last 25 years,” says Singapore Airlines Chief Executive Chew Choon Seng.

All that bad news, however, hasn’t fazed the public one bit. Singapore Airlines, the world’s largest airline by market capitalization, once again landed in first place as the most-admired Singapore company in the Asia 200 survey of subscribers of The Wall Street Journal Asia and other businesspeople.

The airline has been voted Singapore’s top company every year since 1993, when the Asia 200 survey began. It’s the only company in Asia to win its country’s first-place ranking every single year. Temasek Holdings, the Singapore government’s investment fund, owns 54% of Singapore Airlines

Singapore Telecommunications Ltd., Southeast Asia’s largest telephone company by market capitalization, was ranked second in the survey, and United Overseas Bank placed third. This year, Singapore Airlines ranked first in most subcategories, including reputation, quality of service and products, innovation in responding to customer needs and long-term management vision. It ranked fourth, however, in the category of financial reputation, reflecting concerns about the tough environment faced by airlines world-wide.

Singapore Airlines dominates the survey each year because the company consistently delivers on its brand promise: the airline boasts top-tier service, the latest in-flight entertainment and amenities, and one of the youngest fleets in the sky. The company, meanwhile, has continued to invest in new planes and staff training throughout the global economic crisis. Singapore Airlines has 10 more A380s, 11 more A330s, 20 Boeing 787s and 20 Airbus A350s on order today. There have been no cuts in core areas of service and fleet renewal, despite continued pressure on the bottom line, says Mr. Chew.

“That’s kept us in good stead,” he says. “It shows we are committed to staying true to our core values, our market positioning and the identity of the company.”

The average age of Singapore’s fleet right now is 6 years old, which puts it way ahead of the pack. The average fleet age of airlines world-wide is 14 or 15 years, according to Corrine Png, head of regional transportation research at J.P. Morgan. “This generates customer appeal,” she says. “People are excited about traveling on the newest aircraft with the best technology.”

Asian airlines are widely perceived to have among the best service in the world, and within Asia, Singapore Airlines sits at the apex. “Customer service is the cornerstone of our business strategy,” says Mr. Chew. Any airline can buy the same aircraft with the latest gadgets, he says. It’s the operating systems and the people that set SIA apart. The airline makes optimal use of its customer-relationship management software, so staff can tell what meals, drinks or extras its regular customers prefer. Staff members receive continuing training on both technical matters and customer-service skills. “We’ve managed, over the years, to inculcate that into our corporate DNA,” Mr. Chew says. “We’ve honed it so it’s not just one or two flights that you get good service on; it’s all flights.”

Employees buy into the service mantra when they join the airline. Last year, a flight attendant named Caroline Chou noticed an Indian passenger, who suffered from sclerosis, had fallen ill on a flight from Los Angeles to Coimbatore. The plane landed for a stopover in Taipei, where Ms. Chou was due a few days off. She escorted the man and his family to a hospital, and stepped in to translate for the Mandarin-speaking doctors. Although she wasn’t required to, Ms. Chou visited the family on her days off. When the family was informed the man could continue his journey only on a flight equipped with specialized medical equipment, Ms. Chou helped source the equipment and get authorization from various authorities to take the gear on board.

Providing the latest technology and attentive staff has helped make SIA the airline of choice for many business travelers. Singapore Airlines earns 60% of its revenue from business and first class; other Asian airlines earn, on average, 20% of their revenue from premium seats, according to Ms. Png.

To be sure, there is continued turbulence ahead. Mr. Chew, who has worked for the airline since 1972 and served as the CEO for six years, reckons this is the worst environment in decades, and doesn’t anticipate a quick economic recovery. Past periods of economic turmoil, like the 1998 Asian economic crisis, the 2003 outbreak of SARS and even the dotcom crash, were largely regional in nature, so falling demand from one part of the world was largely offset by other regions, says Mr. Chew. This time the impact is global. The rest of the year will remain tough, and the prospect of a recovery in 2010 depends entirely on how governments around the world manage their economies and how consumers respond, says Mr. Chew.

There are some signs that while things have yet to get better, it’s at least stopped getting worse. The decline in SIA’s forward bookings has leveled off, which is good news. But the situation has yet to improve. The airline warned that it could post its first-ever annual loss if conditions didn’t improve.

The company has moved to stem costs. Capacity has been cut by 11% for the current fiscal year by trimming routes and grounding planes. In June, the airline announced management would take a 10% pay cut, and the CEO and board pay would be cut by 20%. Pilots agreed to take one day unpaid leave a month and a salary cut equivalent to 65% of one day’s salary per month. Agreements negotiated with staff unions, meanwhile, include a large variable component that links pay to the company’s performance. When the company announced its quarterly loss last month, it also said that pay for 12,000 staff based in Singapore would be cut by 10% for at least three months starting Aug. 1

“Right now, our challenge is to manage our costs so we can keep our noses above water, and put us in a position to ride the upturn when things pick up,” says Mr. Chew. “We also need to manage resources so we can uphold the values and the business strategy of the company.”

Since then, the airline has carried more than 1.2 billion customers on its extensive route network, and become recognised as one of the world’s elite carriers.

Paying tribute to the airline, Prime Minister Gordon Brown said: “British Airways has never lost the pioneering spirit and vision that saw it take to the skies with the world’s first daily international flight from London to Paris on this day in 1919.

“Ninety years on, the world’s most iconic airline is still proudly flying the flag and remains a great British brand. Many congratulations to all its staff – past and present, on this special day.”

British Airways chairman Martin Broughton said: “Over the past nine decades, British Airways has played its part in many historic episodes. We provided the first air links to far-flung capitals in the days of empire, flew Winston Churchill across the Atlantic during wartime, brought Queen Elizabeth back to Britain after the passing of George VI, repeatedly led the way with aircraft innovation and have often proudly transported home our sports teams from success overseas.

“We have a rich history supporting Britain and will carry this forward to our centenary and beyond.”

90 years on from that first Paris flight, British Airways now offers up to nine daily flights to the French capital of fashion and romance, all ideal for a Paris holiday British Airways offers great deals on a wide range of Paris hotels, coupled with affordable fares on flights.

The airline is marking its anniversary in a variety of ways. Swarovski, has loaned a giant bejewelled Union Flag to the airline. The stunning 4ft by 2ft artwork is embossed with more than 126,000 crystallized Swarovski Elements and will be in the British Airways arrivals lounge in Terminal 5 until September.

An internal exhibition will showcase memorabilia from nine decades of travel, while customers in Terminal 5 have been treated to members of the BA cabin crew, along with TV personality Kirsty Gallacher, modelling vintage uniforms in the terminal in the run up to its anniversary week.

The airline has decided to close the Thailand base because of falling demand for international travel.

With Bangkok now closed – Auckland, London and Tokyo are the three remaining off shore bases.

Qantas has been resistant to cutting cabin crews from its substantial Australian-based workforce, instead opting for leave-without-pay measures.

Earlier this month the Australian carrier said passenger volumes were improving but the economic outlook remains volatile after booking a 87.9 per cent decline in annual profit.

AICCA has about 3,500 members. Though the numbers may be small in comparison to other unions, some members said that it was a positive outcome, which may lead to bigger support from others.

“AICCA has accepted the carrier’s proposal. However, it has not accepted it in its present form. A 50 per cent cut in PLI is too much, AICCA has asked the management to bring it down,” a union member, who did not want to be named, said.

On Wednesday evening, there was also a buzz that Jadhav has told the unions that they accept PLI cuts or the company would be handed over to the Board of Industrial Financial Reconstruction (BIFR), a body for reviving sick public firms.

The AI spokesperson, however, denied any such claim. “We have made no reference to BIFR or lock out. We can’t identify unions who have accepted our proposals. If any one them accepts then rest will also follow,” Jitendra Bhargava, AI spokesperson said.

However, other unions including aviation industry employees guild (AIEG) and the air corporation employees union (ACEU), are still sticking to their stand saying that they are not going to accept any cut in PLIs. The unions have written a letter to Jadhav with details on their wage agreements and settlements.

“Our PLIs have already come down by 40 percent since last year. There is hardly any scope to cut them further. The management must cut the PLIs of people who get higher salaries and allowances,” said an ACEU member.

The management may meet unions again. The unions said the chairman has assured to review the reduction for various categories.

In the early 1970s, Sen. Kennedy held extensive hearings as chairman of the Subcommittee on Administrative Practice and Procedure, pushing deregulation as a way to increase competition and bring affordable air travel to millions of Americans. At the time, the Civil Aeronautics Board, a government agency, set airline fares and routes, limiting competition and guaranteeing airlines’ profits. The hearings drew media attention and raised the profile of what had been a largely academic issue to major pro-consumer status.

Two aides, Phil Bakes and Stephen Breyer–who later became a Supreme Court justice– convinced Sen. Kennedy to lead the deregulation charge, even over objections from the labor unions that supported the Massachusetts senator. Deregulation appealed to conservatives who hated government intervention in business and to consumer groups who thought air travel should be more affordable. But the issue wasn’t a natural one for Sen. Kennedy. Yet he saw it, in part, as a broad issue that could give him more clout for presidential runs in 1976 and 1980, according to Thomas Petzinger Jr.’s definitive account of that era in aviation, “Hard Landing.’’

Sen. Howard Cannon of Nevada, the chairman of the Senate aviation subcommittee, supported the CAB and airline industry against deregulation, but was eventually persuaded to switch views in large measure by Sen. Kennedy. The Kennedy-Cannon airline deregulation bill was signed by President Carter in 1978.

“I don’t think airline deregulation had any chance around that period unless he took leadership as he did,” said Mr. Bakes in an interview today. “He took a lot of flack and was way out in front of it.”

In many ways, airline deregulation showed the essential strength of Sen. Kennedy as one of Washington’s most effective legislators. “That legislation from beginning to end and how it changed the industry and changed consumers – that was classic Ted Kennedy,’’ said Mr. Bakes, who had a long career at airline and travel companies and now runs a private equity firm in Miami.

“There was no support for it early on,” he added. “There was no constituency for it. And he took it from scratch and made it legislative reality, using his smarts, his charm, his legislative instincts, his ability to share credit and his real desire to get stuff done.’’

Later when the industry was suffering turmoil of airline bankruptcies and shutdowns in the early 1990s, Sen. Kennedy expressed some reservations about the outcome. “A lot of people didn’t foresee how turbulent that industry would be when cut loose,’’ Mr. Bakes said.

Airline deregulation has created jobs and careers for many at surviving and start-up airlines, and led to huge turmoil and losses for others when employers folded or went bankrupt. The clear beneficiary has been consumers, who find a wealth of flight choices at far lower prices.

The average price to fly one mile domestically is less than half what it was in 1978 after adjusting for inflation, according to the Air Transport Association, and the number of people who board airplanes has tripled since deregulation.

Delta Air Lines is adding business-class seats that recline almost flat on all flights from New York to Los Angeles and San Francisco to compete with United Airlines and Virgin America.

Those new seats recline 150 degrees, Delta said Tuesday in a statement. The Atlanta-based carrier also said it added fully flat bed seats in business class on all New York-London flights.

Delta, the world’s largest airline, is making the investment as part of its effort to win passengers in New York, the biggest U.S. market in which no single carrier dominates. The so-called lie-flat seats are prized by business travelers, who generally pay the highest fares and fly more often.

UAL’s United offers lie-flat seats on its first-class service called p.s. connecting New York with Los Angeles and San Francisco, and on many international flights, said Robin Urbanski, a spokeswoman for the Chicago-based carrier. Virgin America, the low-fare carrier partly owned by U.K. billionaire Richard Branson, has seats in business class that recline similarly to Delta’s.

The airline said the global recession had hit air travel hard and it has been cutting jobs and capacity to cope with lower passenger numbers.

“This result positions Air New Zealand as one of the top airline performers globally but it falls short of delivering shareholders an appropriate commercial return,” Chairman John Palmer said in a statement.

The airline said normalised profit before tax fell 26 percent to NZ$145 million, with losses on fuel hedging being partially offset by gains from foreign exchange movements.

Air New Zealand posted a net profit of NZ$21 million ($14.3 million) for the year ended June 30, compared with NZ$218 million last year.

The company declared an unchanged final dividend of 3.5 cents per share.

Air NZ shares, 77 percent owned by the New Zealand government, closed on Wednesday at NZ$1.25. So far this year the stock has risen around 32 percent, compared with a near 14 percent gain in the benchmark NZSX-50 index .NZ50.

The airline dominates the domestic markets, where it competes on main routes with Australian airlines Virgin Blue (VBA.AX) and Qantas Airways Ltd’s (QAN.AX) low cost offshoot Jetstar.

Over the year passenger demand fell 7.6 percent, but also reduced the amount flown — seat kilometres — by 7.2 percent.

Last week, Qantas reported its annual profit falling 88 percent as it fell into a loss in the second half, although it said there were early signs of a pick-up. [ID:nSYD352340] ($1=NZ$1.47) (Reporting by Adrian Bathgate)

A linkup of the two carriers would have allowed them to combine networks and consolidate airport operations, trim flights and staff and gain pricing power with suppliers and consumers.

It would have put them in better position to compete with the soon-to-be-merged Delta Air Lines and Northwest Airlines.

But Continental abruptly pulled out of negotiations after earnings reports showed United’s financial position had weakened.

Since then, Continental, the top carrier at Newark Liberty International Airport, decided to do what may be the next best thing from its perspective: combine forces with United and other members of the so-called Star Alliance of airlines, and get the federal government to waive antitrust laws aimed at prohibiting price fixing and other forms of collusion.

Continental also sought antitrust immunity so that it and other Star members can act as one carrier by coordinating schedules and fares.

Continental’s decision to leave the SkyTeam alliance and join United, Lufthansa and others in Star is part of a larger trend: Rivalries increasingly are between international teams of airlines positioned to take advantage of less-restrictive international open skies treaties and not between individual carriers.

In the early 1990s, the global airline industry was comprised of individual carriers competing on routes connecting one city to another, said Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, Pa.

“Now, public policy has given us a new model of networks competing with each other on a network basis, and it’s a whole new world,” he said.

The way the new battleground is shaping up since the United States and European Union entered into an open skies agreement early last year, Star competes with SkyTeam and both compete with the the 10-member Oneworld Alliance, which includes American Airlines, British Airways and Qantas.

The Department of Transportation granted antitrust immunity last year to Delta, its merger partner Northwest and four other SkyTeam players — Air France, Alitalia, Czech Airlines and KLM Royal Dutch Airlines. Oneworld carriers are waiting for a DOT ruling on their request for expanded immunity and a closer relationship between American Airlines and British Airways.

Continental’s inclusion in the Star Alliance, approved last month by DOT, will give Continental “more flexibility to serve their better customers,” said Raymond Neidl, an independent airline analyst. The arrangement should also make Continental better able to hold market share in the New York metropolitan area as Delta creates a domestic hub at La Guardia International Airport.

“Long term it should be beneficial for Continental and United,” Neidl said.

Transportation Secretary Ray LaHood said in a statement that the alliances “will benefit consumers, enhance competition and preserve jobs.”

Specific routes that will be operated cooperatively have not been identified, but Continental said Monday in a statement announcing it will join Star on Oct. 27 that the hub at Newark Airport “will play a particularly important role.”

The expanded Star agreements approved by DOT allow Continental to cooperate with nine Star Alliance members: Air Canada, Austrian Airlines, British carrier BMI, LOT Polish Airlines, Lufthansa, Scandinavian Airlines (SAS), Swiss International Air Lines, TAP Air Portugal and United. The DOT also approved a trans-Atlantic joint venture called Atlantic Plus-Plus, which involves Continental, Air Canada, Lufthansa, and United.

The four participants in Atlantic Plus-Plus expect “to operate a substantial portion of their international air services within the venture,” the DOT said in its final order, which gives the carriers 18 months to launch the effort.

“The venture, as well as the broader alliance, will create substantial new service options and fare benefits for consumers,” the department said.

However, the Department of Justice had voiced objections to parts of the expanded Star Alliance that it viewed as anti-competitive.

The DOT, which had the final say, acted on some of the criticisms, denying the airlines’ requests for immunity on routes where it would result in little or no competition. These “carve-outs” in the trans-Atlantic corridor include routes connecting New York (and Newark) to Copenhagen, Stockholm, Geneva and Lisbon, Portugal. Carve-outs also will be required on routes connecting New York and Ottawa.

The DOT’s approval, even with the carve-outs, allayed consolidation-minded airlines’ concerns that the White House would turn sharply away from the previous administration’s pro-merger and alliance stance, said Mike Boyd, a Colorado aviation consultant.

“For New Jersey business travelers (the agreements) will provide a convenient extension of routes from cities that we can fly to non-stop out of Newark,” said Sara Bluhm, assistant vice president for energy and federal affairs at the business and industry association, which represents more than 22,000 New Jersey businesses.

Travel will be “more seamless,” she said, adding that Continental’s greater reach from the Newark hub “makes New Jersey a more attractive place for foreign companies to come and do business here.”

The nine largest U.S. carriers lost nearly $600 million in the second quarter of this year. Bigger losses are predicted in the third and fourth quarters, and some analysts have raised the possibility of another round of bankruptcies.

The nation’s airlines have been in a defensive crouch for two years. They’ve cut flights and fired workers — first to absorb rising fuel prices, then to ride out the recession. But revenue is down one-fifth or more from a year ago at the four largest carriers.

Because they’ve cut costs, sold new stock and borrowed money, the airlines have plenty of cash for now. But even in good years, airlines build cash during the busy summer travel period, which ends around Labor Day, to get through the slower months.

Airlines need enough cash to pay employees, buy fuel and pay other bills, including payments on the money they’ve borrowed. If cash falls too low, they can be pushed into bankruptcy protection, as happened earlier this decade with Delta, United, Northwest and US Airways.

United, US Airways and American are often mentioned as the airlines in the most precarious financial positions. They rely on business travelers who pay hundreds of dollars per ticket to sit in first-class. Many of those people are grounded or flying in cheaper coach seats due to the recession. Meanwhile fuel costs, although lower than last year’s record levels, have been rising. The spot price of jet fuel has jumped about 70 percent since March.

One leading analyst, JPMorgan’s Jamie Baker, estimates that by the fourth quarter, American Airlines parent AMR Corp. will burn more than $11 million a day, while United Airlines’ parent UAL Corp. will be going through $7 million a day.

As of June 30, AMR had about $2.8 billion in unrestricted cash and short-term investments, UAL had $2.6 billion, and US Airways had about $1.7 billion. If Baker is right about how much cash they’ll burn this winter, all three will have a thinner cash cushion than did the carriers who filed for bankruptcy protection in 2004 and 2005.

United and US Airways were among several airlines that made Chapter 11 filings from 2001 through 2005. They used bankruptcy protection to shed debt and lower labor and pension costs.

Standard & Poor’s analyst Philip Baggaley says, however, that the two have little to gain by doing it again and would face “more risk that if they go into bankruptcy they might not come out.” That’s because they might not find the financing they would need in the current tight credit market.

In most airline bankruptcies, the carriers have kept flying and passengers hardly noticed any difference. In the worst case — liquidation — employees would lose their jobs, shareholders would lose their investments, and stranded travelers could be forced to ask their credit card company for ticket refunds.

More mergers are also a possibility. Delta and Northwest combined last year, three years after each went through bankruptcy court. The current US Airways is the product of a combination with America West. United and Continental talked but didn’t reach a deal.

Consolidation or liquidations could reduce competition, at least temporarily, leading to fewer flights on the surviving carriers.

“Who gets hurt in consolidation? The customer,” says Morningstar Inc. analyst Basili Alukos, “because prices go up. If anyone has benefited from the airlines’ misery, it’s been customers, because prices have fallen.”

Some analysts think talk of further consolidation is premature. Airlines have a knack for borrowing more money and living to fly another day.

“Undertaking a merger takes time, money, management attention and labor cooperation,” says S&P’s Baggaley. “If you’re fighting for survival, it’s risky to add that to your plate.”

The airlines say they can survive the slow season.

“We don’t think any airline will have liquidity issues this winter,” says US Airways Chief Financial Officer Derek Kerr.

There are factors working in the airlines’ favor. Vacation travelers kept planes nearly full this summer. Fees for checked bags and other items are raising hundreds of millions of dollars.

Although it’s been lumped in with United and US Airways, American parent AMR has some advantages. It has about $3.7 billion in assets to sell or mortgage. That includes planes, the American Eagle regional subsidiary and miles in its frequent-flier program.

But AMR also has $1.3 billion in debt maturities and what CFO Thomas Horton called “several hundred million dollars” in pension funding due next year.

US Airways has little left to sell or hock. CEO Doug Parker says his airline has more cash than other network carriers except Continental when restricted cash is included. “So it’s hard to accept the view that we get into trouble before others,” he says. But restricted cash comes with limits on how it’s used.

UAL could be forced to set aside noncash collateral if its cash kitty shrinks, under an agreement with a credit-card processor. CFO Kathryn Mikells says her company has modest debt payments, low capital spending and no defined-benefit pension obligations.

During the last big slump in air travel following the 2001 terror attacks, the airlines turned to Washington for help. So far the carriers say they don’t need the kind of bailout money given to banks and auto makers.

Kerr, the US Airways CFO, doubts Congress would approve a bailout. “We’re not counting on that, and we’re not lobbying for it.”

The news is likely to come as a blow to BA chief executive Willie Walsh who has made it his ambition that the airline is one of a handful of carriers to emege from the current economic downturn and inevitable consolidation. BA has also since July been trying to negotiate a merger with Spanish rival Iberia.

The ending of talks is unlikely to surprise aviation anaylsts in Australia who had failed to see many benefits for Qantas.

The merger was also strongly opposed by Australian unions, who argued it would affect the jobs of several thousand employees.The flag carrier had argued a deal with BA would help it save on maintenance costs and weather the global financial downturn.

Together, the two airlines would have had annual sales of $23bn and a fleet of 500 planes.

Qantas Chief Executive Alan Joyce warned last week that the merger faced major hurdles and would only go ahead if Qantas could secure major revenue and cost benefits.

Today both the airlines said that “Qantas and BA will continue to work together on their joint businesses between Australia and the UK as part of the oneworld alliance.”

Qantas had said that should the talks with BA fail, the carrier might seek to strike a similar deal with an Asian rival.

The European Court of First Instance in Luxembourg today annulled a 2004 decision by the European Commission that canceled Ryanair’s accord with state-owned Charleroi airport in Belgium. Under the accord, the carrier paid less for landing fees and ground services.

The ruling is “great news for Charleroi, competition, consumers and low-cost airports across Europe,” Michael O’Leary, Ryanair’s chief executive officer, said in a statement today. The company will call on the commission to drop its pending probes of other airports, he said, and it’s time the two “stop fighting.”

At stake today was Ryanair’s ability to strike agreements with secondary airports that are seeking to boost regional development with more flights and passengers. The Dublin-based airline’s success has irked flagship carriers concerned about losing customers at major airports.

“It’s helpful as far as it goes because Ryanair does do deals with a number of other regional airports, and the more freedom it has to do these deals, the better,” said Douglas McNeill, an analyst at Blue Oar Securities in London.

Probes pending

The Charleroi case is the most prominent in a series of disputes between the EU and Ryanair. The commission has probes pending against eight other small airports operating with Ryanair, including in Denmark, France, Germany and Italy.

The commission “will need to study this further” before commenting in detail, spokeswoman Pia Ahrenkilde-Hansen told reporters at a press briefing in Brussels today.

“As far as we see it, this judgment does not have an impact on the other cases,” she said. The ruling “looks at the methodology of the commission’s approach rather than commenting on the substance of the private investor test.”

Ryanair gained 10 cents, or 3.6 percent, to 2.90 euros in Dublin trading. The company’s stock has fallen 37 percent this year, reducing its market value to 4.27 billion euros ($6.14 billion).

The commission had rejected Ryanair’s reduced landing fees at Charleroi airport, 56 kilometers (35 miles) south of Brussels, curbed discounts for ground services, limited other benefits to five years from 15 and ordered Ryanair to repay 4 million euros in aid.

Refusal

“The commission’s refusal to examine together the advantages granted by the Walloon region and by Charleroi Airport, and to determine whether, taken together, those two entities acted as rational operators in a market, is vitiated by an error of law,” the court ruled today.

Jim Callaghan, Ryanair’s director of legal and regulatory affairs, in an interview at the court today called it a “vindication for Charleroi airport.”

“Charleroi airport has been profitable each year for the past six years, which disproves the commission’s original claim that Charleroi would be loss making for the term of the Ryanair contract,” O’Leary said. “They have built a new low cost terminal, based on the success of their agreement with Ryanair, and now other airlines are serving Charleroi as a result.”

The Brussels-based commission in 2005 drew up new state-aid guidelines for airports to codify the basis of its Charleroi decision. The guidelines set out the conditions under which airports can receive public financing and offer airlines startup benefits.

Low-cost model

Ryanair, which says it pioneered the low-cost business model in Europe, lowers costs partly by operating from smaller airports. Before 1997, when Ryanair started its first route to Dublin, Charleroi airport had about 30,000 passengers a year compared with about 2.5 million today, according to Ryanair.

“Today’s decision is hugely important” and “clarifies that the low-cost airports model works,” Callaghan said.

October’s numbers are down 5.6 percent, or nearly 24,000 jobs, from a year earlier.

The numbers will only get worse in the next few months as the airlines complete the layoffs and system shrinkage they had announced last spring and summer.

According the Bureau of Transportation Statistics, the decline in jobs is hitting all levels of airlines – major network carriers, low-cost carriers and regional airlines, with the major network carriers such as American Airlines Inc. and United Airlines Inc. showing the largest declines.

United led the list with 5,200 fewer full-time equivalent employees in October compared with a year earlier, dropping 9.9 percent to 47,200. American employed 2,900 fewer people, down 4 percent to 70,400, the bureau said.

“At this time, our current [staffing] reductions will end at the end of January,” American spokeswoman Tami McLallen said Monday. “But depending on the economy, other schedule reductions may be necessary.”

Delta Air Lines Inc., which merged with Northwest Airlines Inc. in November, showed a 2,700-employee drop, or 5.6 percent, to 45,700, while Northwest was down 1,500 employees, or 5.1 percent, to 27,700.

Among the nation’s 10 largest passenger carriers, Dallas-based Southwest Airlines Co., JetBlue Airways Corp. and Alaska Airlines Inc. reported an increase in their workforces.

Southwest added 1,790 employees, or 5.3 percent, to 35,700 full-time equivalent employees, the most growth of any of the 31 carriers that the bureau tracked in October.

JetBlue saw its workforce increase 560 employees, or 5.7 percent, to 10,400, and Alaska added 100 employees to 9,900.

Although airline employment decreased after the Sept. 11, 2001, terrorist attacks and a number of airline bankruptcies, the numbers had slowly grown in 2006 and 2007 as carriers rebuilt their operations.

However, the soaring price of jet fuel prompted most carriers this year to slash capacity beginning in the summer.

Even traditionally fast-growing carriers such as Southwest and AirTran Airways have reined in growth plans.

Carriers announced that they would eliminate tens of thousands of jobs related to the capacity cuts, and many of those job cuts are yet to come.

For example, United, which said it would eliminate 7,000 jobs, expects to cut 1,200 of those positions in early 2009.

American, which said it would eliminate more than 6,500 jobs, has already slashed thousands of positions but is still working its way through the list of people who want to accept voluntary leaves or buyouts.

“Decisions like this are never easy, but this is the right move at the right time for my family and me. The most difficult part will be leaving the greatest group of teammates anyone could ever have. But I’m encouraged by the fact that as I take my leave, Virgin America is superbly positioned with respect to our financial stability, our reputation with our guests, and our executive leadership,” said Mr. Dana.
Mr. Dana is employee No. 1 at Virgin America, and has held his current position since June 28, 2004. He wrote the first business plan for the Company and played a lead role in developing its initial capitalization and attracting U.S. investors. He led the Company’s campaign to acquire its Airbus A320 family fleet and with his team has raised more than $1.2 billion in aircraft financing. His current responsibilities include treasury, financial reporting, budgets, financial planning and analysis, procurement and fleet planning. In addition, from 2005 to early 2008 he managed Virgin America’s Information Technologies Team. Prior to joining Virgin America, Mr. Dana worked on Wall Street as an investment banker for 16 years at Credit Suisse First Boston and Piper Jaffray covering the aviation and semiconductor industries, including transactions valued at over $50 billion. He holds an undergraduate degree from Yale University and an MBA from Columbia Business School.

“Bob played a foundational role in launching Virgin America and growing the Company from a start-up to the award-winning carrier it is today,” said Virgin America President and CEO David Cush. “He leaves Virgin America as the best capitalized U.S. start-up airline of all time – with a strong business plan and financial portfolio. All of us here thank him for his service and wish him the best in his future endeavors.”

Mr. Dana has agreed to stay on through a yet to be determined date in the first quarter of 2009, in order to facilitate a smooth transition to the new Chief Financial Officer. Spencer Stuart has been retained to conduct a search for the position.

A section of pilots, engineers and senior management has said they are unwilling to accept a pay cut, a senior Jet Airways official said.

This executive, who did not want to be named as a decision has not been firmed up, said Indian pilots with the airline have instead suggested sacking foreign pilots who typically draw larger salaries. Foreign pilots comprise some 33% of Jet’s pilots and are often paid 50% more than their local counterparts. “Since pilots are not willing to accept suggested pay cuts, a section of engineers and senior management are (also) not willing to take pay cuts,” the executive added.

Representatives of Jet’s cabin crew have also approached the management asking that allowances shouldn’t be cut against a backdrop of the airline reducing its flights, said another executive who is familiar with the development. Cabin crew are paid allowances based on flying hours.

Ragini Chopra, a spokeswoman for Jet, said employees had volunteered to take a pay cut. “Over 50% of the employees have positively reacted to the proposal,” she claimed. “I cannot comment or disclose the details of this pay cut proposal since it is purely an internal matter.”
An email sent to Jet on Monday with additional questions went unanswered.

Naresh Goyal, founder-chairman of Jet, had said in a letter to employees earlier this month that the airline’s top management had already volunteered a 25% cut in salary. He also suggested a combination of wage and allowance cuts for pilots to bring their remuneration in line with other employees.
“It is up to (the) chairman to take (a) call on the suggested wage cuts as pilots are not co-operating to his request,” said another Jet Airways executive, who also did not want to be identified. “There is no point in wage cuts if pilots are not willing to do that. Because over 80% of the savings from this pay cut should come from pilots, who draw heavy salaries.”

Airlines have resorted to cost-cutting steps as they are expecting a combined loss of $2 billion
The Society for Welfare of Indian Pilots, an association of pilots with Jet, is in negotiations with the company management over the issue.

Mint could not ascertain the number of Jet employee strength who earn Rs75,000 a month. Jet’s total employees rose some19% to 13,163 in March from the year-ago period and total employee costs rose 28.5% to Rs1,205.2 crore, much of it because of expansion.

Vijay Nara, an aviation analyst at brokerage Centrum Broking Pvt. Ltd, had previously estimated Jet’s wages proposal would only result in 10% savings on total employee costs.

India’s airlines have resorted to a series of cost cutting measures as they are expecting a combined loss of $2 billion (Rs9,460 crore) in fiscal 2009 due to higher jet fuel costs and overcapacity.
Jet’s rival Kingfisher Airlines Ltd recently rationalised salaries of pilots by migrating to a remuneration structure linked to flying hours in a bid to cut costs.

“We have introduced productivity-linked remuneration in line with international practices,” said a senior Kingfisher Airlines executive who didn’t want to be named. “… Deccan Aviation (which it acquired) had this structure and we are putting Kingfisher Airlines’ pilots in that structure.”