Continental Airlines, the nation's fifth largest carrier, said today it will reduce its long-term flight schedule by about 20 per cent and will be forced to lay off about 12,000 employees after the hijacking attacks on the United States.
Continental cited a drastic decline in demand for air travel caused by Tuesday's terror attacks and the operational and financial costs of dramatically increased security requirements.
"The US airline industry is in an unprecedented financial crisis", said Mr Gordon Bethune, Continental chairman and chief executive officer.
Hijackers commandeered aircraft and crashed them into New York's landmark World Trade Center twin towers, which collapsed. Another flight was rammed into the Pentagon and a fourth plane crashed in Pennsylvania, apparently missing its target. Hundreds were killed and thousands remain missing.
The US Federal Aviation Administration grounded all commercial air traffic on Tuesday for the first time.
On Thursday, the US Department of Transportation ordered the US national airspace reopened to commercial and private aviation - but flights resumed slowly as airports and airlines implemented security measures.
Before the attacks, Continental and its subsidiaries flew more than 2,500 flights a day. The airline currently employs more than 56,000 people.
In the last four days, Continental said it has seen a drastic drop in bookings in an already declining economy. In addition, many corporations have instructed their employees to avoid US airlines, the Houston, Texas-based carrier said.
Mr Bethune called on the president and members of Congress to take immediate action to restore the stability of the industry.
"Our industry needs immediate Congressional action if the nation's air transportation system is to survive", he said in a news release.