NEW YORK -- The travel industry's grim outlook worsened Monday, and airline and hotel stocks gave back some of last week's heady gains, on fears that a war could be more drawn-out than investors originally anticipated.
Delta Air Lines, the nation's third largest carrier, said it would shrink its network by about 12 percent, reducing service domestically and internationally as a result of fewer travelers since the war began in Iraq. A spokeswoman said the company, whose stock plunged 15 percent Monday, has not made any decisions yet on potential layoffs.
"It looks like they're waiting to see how the war plays out," said Karen Miller, a spokeswoman for the Air Line Pilots Association in Atlanta.
The cutbacks at Delta followed similar moves made last week by United Airlines, Continental Airlines and Northwest Airlines, which said it would lay off 4,900 employees and trim its flight schedule by 12 percent.
With the industry's woes mounting, lobbying for federal aid has intensified in recent days but no deals have been struck.
Transportation Secretary Norman Mineta, who advocates airline relief, met with Bush administration officials Monday. But no aid was proposed for the airlines in the $75 billion war-spending bill crafted at the White House on Monday, dashing the hopes of some industry officials. Most of the money in the Bush administration bill would go to the Department of Defense.
Congress may support extending war-risk insurance, which protects airlines from liability claims for injuries resulting from war or terrorism, and reimbursing them for new security costs, such as bulletproof cockpit doors, said Gary Burns, spokesman for House aviation subcommittee chairman John Mica, R-Fla.
Major airlines have asked for much more, though, including up to $9 billion in tax cuts.
"Their proposal to receive a tax holiday has met with considerable skepticism on the Hill," Burns said.
The hotel industry's troubles were also apparent Monday as Starwood Hotels & Resorts Worldwide Inc., owner of the Sheraton and Westin brands, withdrew its first quarter and full year earnings forecasts. The news sent its stock price tumbling.
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