Air Canada has filed for bankruptcy protection and more major airlines have announced cuts to cope with the crisis in global aviation made worse by the Iraq war.
The spiral began with a slump in travel after the September 11th, 2001, hijack attacks in the United States, a slowdown in the world economy, a rise in aviation fuel prices, the outbreak of a new respiratory ailment in Asia that has further discouraged travel, and a war in Iraq that has inflamed the Middle East.
Air Canada, the industry's 11th largest carrier, cited all those setbacks in filing for protection under Canadian law, the first major airline to succumb to bankruptcy since the start of the Iraq war.
Its move came just one day after the world's largest carrier, American Airlines, narrowly averted a similar fate by striking deals with major labour unions to sharply cut costs. The union representing pilots at American Airlines said about 2,500 pilots will be furloughed or retire over the next year as part of the deal with the airline.
The world's second largest airline, United Airlines, already is under US bankruptcy protection and struggling to restructure. Analysts predict more carriers could be forced into bankruptcy if the Iraq war drags on.
In Europe, KLM Royal Dutch Airlines said yesterday it would soon implement "far-reaching measures" to cut unit costs by 10 per cent, and could not rule out layoffs.
The announcement followed similar moves by other major European airlines, including British Airways, Air France and Lufthansa.