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First The Automakers, Now The Airlines?

Posted By admin || 16-Apr-2009

According to an article in the Dallas Morning News, Southwest Airlines Co. has reported a $91 million loss in the first quarter of 2009. This is one day after AMR, the parent company of American Airlines reported a $375 million loss for the first quarter of 2009. Southwest Airlines has taken swift action, stopping all hiring, freezing pay for senior executives and offering a buyout to nearly all of its employees to avoid implementing forced job losses.

The article quoted Gary Kelly, Southwest's chairman, president and chief executive officer:

"We face the toughest revenue environment in our history. A rapid weakening in passenger demand during the first quarter, particularly among business travelers, led to our first quarter net loss," he said. "Although competitively strong and financially resilient, we are not immune to the challenges the worldwide recession is having on air travel."

Are we gearing up for an airline industry bailout or bankruptcy? It sure sounds like it with the number of losses being reported in this industry. Well, one thing is for sure, we're going to see more job losses for those working in the airline industry and I've got a sneaky suspicion that it won't be limited to baggage handlers and other hourly workers. Southwest and American may need to implement massive job losses before they get into the black financially, at least until the recession is over. More specialized workers may face job losses in this industry and/or big cuts in pay. Specialized jobs such airline mechanics and pilots may be more difficult to replace in this current economic environment. With the amount of debt and lack of savings common amongst highly paid and specialized workers we will eventually see a rise in personal bankruptcies as the job losses increase.

Categories: Economy
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