The economic shockwaves from the World Trade Centre catastrophe have rippled across the US. Many US states are bracing for an economic downturn through higher unemployment, reduced spending and lost revenue from airports and airlines.
The worst affected could slip into recession, such as Washington on the west coast where the giant aircraft manufacturer Boeing is cutting 20,000-30,000 jobs. Nation-wide, the unemployment rate of 4.9 per cent is expected to rise rapidly.
Hotel reservations have plummeted in popular destinations across the United States, from New York to Hawaii. The New York Times carried a front page picture yesterday of idle porters at the Plaza Hotel, where more than 750 of the 1,000 rooms are empty.
Hotel groups are rapidly reassessing their forecasts. Hilton Hotels said yesterday in Los Angeles that it expected to fall short of previous guidance for third and fourth-quarter financial results in light of a sharp travel drop-off.
Much of New York's $25 billion (€27 billion) tourism industry was already in recession when the World Trade Centre was attacked, and many of its 280,000 workers are likely to lose their jobs. The loss of 7 per cent of its office space in the attacks will also cut into New York's revenue. Washington DC has also seen its tourism industry wiped out.
The disaster is taking a toll on earnings across the board; in companies like American Express (travel and financial services down), General Electric (losses in reinsurance and television advertising and a fall-off in aircraft leasing), Oracle (software orders down) and EW Scripps (newspaper and TV advertisements down).
But it is the airline industry that is taking the most spectacular hit. Already 52,000 lay-offs have been announced and the figure is expected to reach 100,000.
Aircraft manufacturing giant Boeing announced on Tuesday night that it would lay off 20,000 to 30,000 of its commercial aircraft workers as orders for new planes drop and airlines around the world mothball some of their fleet. Most lay-offs are expected in the Puget Sound region of Washington state where some 60,000 of its 80,000 employees work in the company's commercial aircraft division.
United Airlines officials said it plans to cut at least 20,000 employees, or 20 per cent of its workforce. Continental Airlines has said it is cutting 12,000 jobs, and US Airways expects to lay off 11,000. The biggest carriers, American Airlines and Northwest, are expected to announce job cuts today. Honeywell said it would slash 3,800 more jobs on top of 12,000 expected by year's end.
The airline industry has been haemorrhaging cash and posting notice of huge losses since the shutdown of airspace and a new fear of flying, which has driven travellers to seek other means of transport. Amtrak has reported a 40 per cent increase in ticket sales. Airlines had $9 billion cash on August 31st and executives said they would need a cash injection of $1.1 billion by November just to pay wages and buy jet fuel. The industry has made a direct request to Congress for $17.5 billion to help meet emergency needs of $24 billion.
The crisis has forced a wide range of sectors to cut profit outlook. The housing market slowed to a crawl last week. Restaurant companies have lowered profit forecasts.
Photography multinational Eastman Kodak has drastically cut its third-quarter profit outlook as its stock fell 12 per cent.
