Continental Airlines has said it is laying off 12,000 staffers and has warned it could file for bankruptcy as it and two other US carriers cut flight schedules in the fallout from the air attacks on the World Trade Centre and the Pentagon.
The industry's deepening crisis led Mr Gordon Bethune, the chief executive of Houston-based Continental, to predict 100,000 airline job losses worldwide and prompted the Bush administration to announce it will hold urgent talks with carriers about their financial woes next week.
Without financial help from the government, Continental said a late-October reorganisation of the company under protection from the bankruptcy court would be "prudent."
Northwest Airlines and United Airlines said they would cut schedules by 20 per cent, along with Continental, the fifth-largest airline.
Tuesday's air attacks, which left thousands entombed in the rubble of the World Trade Centre's twin towers, shut down the nation's aviation industry for nearly three days and have prompted Americans to curtail travel plans sharply.
The airline business, which will now also have to increase spending on security measures, was already reeling because of the economic downturn, surging labour costs and high fuel prices.
The layoffs announced by Continental, which represent 21 percent of its staff of more than 56,000 people, are likely to be followed by job cuts elsewhere.
Minneapolis-based Northwest Airlines, which has 53,000 employees, said it would review its overall staffing needs by next week and bring in long-term scheduling cuts by October 1st.
The Geneva-based International Air Transport Association, which has 266 member airlines, has estimated that this week's immediate revenue losses and extra costs for the industry could total $10 billion.