Economic damage widens

Wednesday, Oct. 24, 2001 | 10:47 a.m.

SUN WIRE REPORTS

The fallout to the U.S. economy from the Sept. 11 terrorist attacks spread today with word of a record loss at American Airlines and big job cuts ordered by several U.S. corporations.

American Airlines parent AMR Corp. lost $414 million in the third quarter, a period when two of its jets were hijacked and crashed in last month's terror attacks.

Separately:

* Sears, Roebuck and Co. said it is eliminating 4,900 salaried jobs, or about 22 percent of its salaried corporate and regional staff, over the next 18 months and revising its merchandise offerings as part of a cost-cutting overhaul.

The announcement came as Sears reported a 6 percent decline in third-quarter earnings and outlined a new strategy that moves the retailer further from a traditional department-store company and closer to that of a discount store.

* Eastman Kodak Co. Chief Executive Daniel Carp said Kodak's fourth-quarter profit would be about a third of analyst forecasts and the No. 1 photography company would cut as many as 4,000 more jobs.

Carp's forecast comes a month after he slashed earnings estimates for the third quarter. He blamed the economy and shrinking margins in Kodak's medical-imaging business, which provided 25 percent of profit last year.

* Emerson Electric Co. is cutting 4,000 jobs, or 10 percent of its salaried work force, and will close about 20 of its 350 plants worldwide because of a decrease in customer demand and the downturn in the economy aggravated by last month's terrorist attacks.

* Lexmark International Inc. said it will cut up to 1,600 jobs, or 12 percent of its work force, as the company tries to solidify its position in the computer printer industry.

* AT&T Corp. is cutting an additional 2,400 jobs, meaning the telecommunications giant will have cut more than 8,000 jobs, or more than 6 percent of its work force, this year, The Wall Street Journal reported.

The cuts come as other streamlining takes place within the industry. On Monday, SBC Communications Inc. said it will cut "several thousand" jobs. BellSouth Corp. and Sprint Corp. have announced plans to cut 3,000 and 6,000 workers, respectively.

* Huntsman Corp., the world's largest privately held chemical company, said it plans to cut 700 jobs from its North American businesses by the end of the year.

* Bank of America Corp., the third-largest U.S. bank, will cut 600 jobs in its global corporate and investment banking unit because of a slowdown in the capital markets business.

* Nearly 9 million people in the slumping global tourism industry could lose their jobs in the wake of the Sept. 11 terrorist attacks, the United Nations labor agency said.

In an 18-page report, the International Labor Organization said falling tourist numbers could mean the loss of 8.8 million jobs in the sector, which employs around 207 million people worldwide.

The figure includes 1.1 million job losses in the United States and 1.2 million in the European Union, but the survey said U.S. job cuts could rise as high as 3.8 million, "depending on how travelers react in the coming months."

At American Airlines, the world's biggest airline company said Wednesday that high fuel prices and weakness in the travel industry even before the Sept. 11 attacks also contributed to its largest quarterly loss ever that amounted to $2.68 a share for the July-September period.

AMR had earned $322 million, or $1.96 per share, for the same period a year ago.

Revenue fell to $4.82 billion from $5.26 billion a year earlier.

Since the attacks on the World Trade Center and Pentagon, with each building struck by one American jumbo jet, the airline has eliminated the equivalent of 20,000 jobs throughout its system.

"With the economy weak and fuel prices still relatively high, we and the rest of the industry were experiencing a very difficult financial quarter even before the Sept. 11 attacks," said Don Carty, AMR chairman and chief executive. "But the attacks and their aftermath further weakened traffic and had a staggering effect on our overall financial performance, producing the largest quarterly loss in our long and proud history."

In early trading on the New York Stock Exchange today, AMR shares were up 35 cents at $20.30.

As air travel shriveled up following the nationwide airport shutdowns and has been slow to revive, Carty said he and the entire AMR board of directors executives would take no compensation for the rest of 2001, and that every senior officer and officer of the company had taken voluntary pay cuts.

"We are in the midst of the worst financial crisis in the history of the industry," said Carty, "and yet we have many formidable strengths as we manage our way through the crisis and look to the future."