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Airlines in 'emergency room'
By CNN's Abid Ali
LONDON, England (CNN) -- It's 100 years since the Wright brothers' first powered flight -- a time to reflect on the great advances made since then: the jet engine, supersonic flight and space travel, all powered by man's desire to fly. But there is little time for the airline industry -- plane manufacturers or airlines -- to celebrate. Over the last two years, many have entered the "emergency room" having been knocked around from one crisis after another, as one industry executive with more than 45 years experience put it. Air Canada has filed for bankruptcy protection, British Airways announced plans to accelerate job cuts, Dutch airline KLM said it would cut up to 3,000 jobs, and Australia's Qantas is cutting 20 percent of flights. Meanwhile, Delta Air Lines Chairman Leo Mullin said he would cut his base salary by 25 percent to $596,250 from $795,000, according to Reuters. He blamed tough times in the airline industry for the decision. "Airlines are certainly entering the emergency room," Daniel Solon, aviation consultant at Avmark International, told CNN. "For those seeking Chapter 11 (bankruptcy protection) it's not the end of the road. It gives them enough time to sort out problems. It's certainly a life-threatening situation." Solon, who has worked for American Airlines, Pan Am and TWA, said the airline industry awakened from a four-year "party" in 2000 with a "real bad hangover." "Many spent the time signing big checks for their employees (and) new aircraft, and passengers insisted on the best seats in the plane and were willing to pay for the privilege," he said. "But now costs at many airlines have pinned them down." The International Air Travel Association (IATA) estimates the industry could rack up an additional $10 billion in losses this year because of the war in Iraq. Passenger numbers are expected to drop between 15 and 20 percent this year, IATA says. Airlines are cutting back on additional flights after the outbreak of SARS, the severe acute respiratory syndrome which has claimed more than 75 lives. But Solon says he believes bankruptcy could be a force for good as the industry consolidates. "In the U.S. we could see six strong airlines and in Europe, we'll have three major airlines: British Airways, Air France and Lufthansa. The rest like Alitalia and KLM will fit around them." "That is to say we will see consolidation with KLM becoming part of the BA and American Airlines oneworld (network) or Air France-Delta SkyTeam network."
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