The European Commission has moved to dampen speculation that the EU will step in to support Aer Lingus and other state-owned airlines that have been affected by last week's attacks in the United States. Commission officials stressed that the issue of state aid to airlines was not on the agenda of this weekend's meeting of EU finance ministers in the Belgian city of Liege.
Belgium's finance minister, Mr Didier Reynders, hinted yesterday that, if the US moved to support its airlines, the EU might have to follow suit. But a Commission spokesman said that any discussion of such assistance was likely to be unhelpful. "We don't want to create a problem by talking about it," he said.
Britain has assured its embattled airlines that it will help them deal with the aftermath of the terrorist attacks on America last week, but stopped short of offering a financial bail-out.
Executives from British Airways, Virgin Atlantic and British Midland met government officials yesterday to seek help in riding out the turbulence that has hit the sector A British government spokeswoman said the airlines had not requested specific financial help, but that both sides agreed on the need to keep the industry in the air. "There was agreement about the need to ensure that the competitive positions of British airlines would be maintained," she said.
Other European airlines are also in trouble. German carrier Lufthansa announced on Monday it was cutting three of its translatlantic routes, while Dutch airline KLM said yesterday it expected to report an operating loss for the current year due to the US attacks. Air France said it would reduce capacity and freeze planned hiring Belgian airline Sabena has warned the attacks have worsened its already shaky position, adding it would not survive until the end of the year unless it managed to go ahead with a planned restructuring.
Scandinavian carrier SAS said the US attacks would have a significant negative effect on the airline and it would respond with measures including cutting capacity.
On Monday, the first day of trade following the shutdown of markets last Tuesday, the top six US airlines lost roughly $6 billion in market capitalisation. The hardest-hit is Continental Airlines, the fifth-largest, which will lay off about 12,000 workers.
On Monday, the Houston-based carrier said it would also end service to 10 cities and might have to file for bankruptcy protection unless financial aid was secured. Delta Air Lines, the third-largest US carrier, on Sunday fell in line with its larger competitors and announced a 20 per cent service cut as did
Southwest Airlines, the Dallas-based budget carrier which became the role model for Ireland's successful low-cost carrier Ryanair, said it would avoid layoffs for the time being, but was reviewing other financial options.
