New aircraft orders are down sharply

Chicago-based Boeing, the world's largest aircraft maker, said it planned to axe between 4,000 and 5,000 jobs by the end of the year, blaming "continued weakness in the commercial airline industry".

The move reflects a slowdown in new aircraft orders from major airlines, which have been hit hard by a downturn in passenger numbers amid concern over terrorist attacks and the deadly Sars virus.

"While we are optimistic about the long-term outlook for the industry, many of our airline customers continue to face significant challenges as they struggle to recover their financial health," said Alan Mulally, head of Boeing's commercial airplanes division.

The latest job cuts at Boeing come on top of 5,000 lay-offs announced in November 2002.

The company has announced a total of 35,000 job losses since the 11 September attacks threw the aviation industry into crisis two years ago.

Losing altitude

Also on Thursday, lacklustre second-quarter results from three US airlines underlined the extent of the problems facing the air travel sector.

Delta still faces many challenges as we cautiously emerge from the worst business cycle in our company's history Leo Mullin, Delta chief executive

Delta Airlines, the US' third biggest carrier, said it had made a profit of $184m (�110m) in the three months to June, compared with a loss of $186m one year earlier.

However, when government payments aimed at compensating it for extra security costs were stripped out, the company slumped to a loss of $237m.

Fourth-ranked Northwest Airlines said it had made a profit of $227m, up from a $93m loss in the same period last year, but it too was cushioned by government aid.

Excluding federal handouts and other one-off gains, Continental made a loss of $160m, its worst ever second-quarter result.

Continental Airlines, the fifth biggest US airline, managed to cap losses excluding government aid at $24m, up from a $139m loss a year earlier.

Uncertain outlook

All three airlines' results came in slightly ahead of analysts' forecasts, but none of them was able to confidently predict a recovery.

Delta chief executive Leo Mullin said that while the air travel market had picked up following the end of the war in Iraq, there was as yet no sign of a rebound.

"Delta still faces many challenges as we cautiously emerge from the worst business cycle in our company's history," he said.

Continental's chief executive, Gordon Bethune, struck a more upbeat note, saying forward bookings for the summer season were up slightly, and highlighting the company's success in curbing costs.

But he too downplayed hopes of a turnaround.