Airport Rules Relaxed to Help Ailing Airlines

The European commission lent a helping hand to ailing airlines yesterday by waiving strict rules governing the use of airport slots, because of the impact of Sars and the war in Iraq.

Following a meeting of transport ministers, the commission announced it was temporarily dropping "use it or lose it" requirements which strip carriers of sought-after slots unless they use them 80% of the time.

But the change, which applies until October, angered EasyJet, which has been trying to get its hands on more landing rights at congested destinations.

An EasyJet spokesman said: "In good times, there's no way British Airways or Lufthansa are ever going to give up these slots. The only time they could be forced to allow new competitors in is during times of crisis."

The global airline industry body Iata has estimated that the industry stands to lose $8bn (£5bn) this year as passengers take fright at disease, terrorism and economic uncertainty.

Worst hit recently has been Hong Kong, where Sars has prompted a 65% collapse in passenger numbers. In an attempt to stem the decline, Hong Kong's airport authority yesterday slashed its parking fees for airlines by 75% and allowed carriers to defer payments by three months.

American Airlines, the world's largest carrier appeared to have averted imminent bankruptcy last night after the three main unions agreed to fresh pay-cut deals.

The negotiations were sealed after the resignation of chief executive Don Carty late on Thursday night. Mr Carty had provoked fury among the unions after they learned of a lucrative executive compensation plan put in place shortly after agreeing to $1.8bn in cuts and job losses to keep the airline in business.

The hapless Mr Carty attempted to mend relations with the workers but it was too late to save his own job.

The union representing the airline's flight attendants agreed a sweetened offer at the eleventh hour last night. The pilots and ground workers had earlier approved the new deal, which improves potential bonuses for employees and shortens the length of the concessions by one year to five years.

Gerard Arpey, the company's president, will replace Mr Carty as chief executive. Mr Arpey, 44, has spent his entire career at American, starting out as a financial analyst in 1982.

Board member Edward Brennan will take over as chairman, a job Mr Carty had also occupied.

Fellow struggler Air Canada revealed in court documents yesterday that it was losing C$3m (£1.3m) a day, with its C$450m of cash reserves steadily dwindling.

Air Canada filed for protection against its creditors three weeks ago. Its main hub is Toronto, which the World Health Organisation has advised travellers to avoid, because of the threat of Sars.