As airline demand falls Boeing likely to axe 4,500 jobs

Boeing Co., the world's second-largest airplane maker, is planning to cut about 3 percent of its work force as jetliner demand falls, hurt by the global economic downturn.

The Chicago-based company on Friday said it expects to cut about 4,500 positions from its passenger jet business, which has factories in the Seattle area. Many of the cuts will be in areas not directly associated with aircraft production.

The news comes a day after Boeing reported a 15 percent decline in passenger jet deliveries for 2008, when it faced an eight-week strike by union workers and shrinking airline demand. The lower deliveries ensured Boeing's archrival, Europe's Airbus, retained its rank as the world's top plane maker.

Orders for Boeing planes, meanwhile, plunged by more than half last year, following three straight years of exceptionally strong bookings, a grim reminder that carriers have been scaling back spending since the summer to cope with fewer air travelers.

Most of the job cuts announced Friday are expected to occur in Washington state in the second quarter of the year, the company said. Boeing says employees will receive 60-day notices starting in late February.

"We have made significant strides in recent years to achieve greater efficiency and productivity, but we still face challenges that we must address," Scott Carson, president and chief executive of Boeing's commercial airplanes division, said in a statement.

Boeing said the cuts will enable it to continue focusing on development programs, airplane deliveries, productivity improvements and quality, as well as customer support.

The company said this year's cuts will eliminate roughly the number of positions added to its commercial aircraft operation in 2008, lowering the total number to 63,500. Boeing employed a total of 162,191 people as of Dec. 31.

Agencies

Air fares in India fall in time for New Year

Air fares have finally begun their descent to more reasonable levels this holiday season. On Saturday, Vijay Mallya-owned Kingfisher and low cost carriers — IndiGo and SpiceJet — decided to follow Jet and Air India in cutting fuel surcharge for domestic flights.

While full service carriers have dropped surcharge by Rs 400, LCCs — that had not raised them in last two rounds of jet fuel price hikes — have also reduced by Rs 200 to Rs 300. Now all Indian carriers, whether full service or low cost, have uniform fuel surcharge: Rs 1,950 for short flights and Rs 2,700 for those over one hour flying time.

LCCs like IndiGo and SpiceJet and AI (domestic) don't charge the congestion fee of Rs 150 that Jet and Kingfisher do. In fact, with the difference in fuel surcharge gone, LCCs would be under pressure to cut basic fares. They are looking at re-introducing attractive advance booking fares to stimulate demand. At present, full service carriers' fares are about 20% higher than LCCs and the latter want this gap to be 25-30% to be significantly cheaper.

The airlines' worst fears are coming true as the combined impact of economic glut and terror alerts has cast its shadow on passenger numbers in the ongoing peak travel season. The number of fliers is going to further drop from January to March (traditionally the leanest travel season). "We have to stimulate demand by attractive fares," said SpiceJet director Ajay Singh.