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Airline industry seeks $17.5b in government aid

Congress ready to move quickly

By Jim Abrams, Associated Press, 09/19/01

   
 TODAY'S TOP STORIES

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 TODAY'S GLOBE

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 THE RETALIATION

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 THE ATTACK

Sept. 11, 2001
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WASHINGTON -- Warning of impending bankruptcies, an airline executive asked Congress Wednesday for $17.5 billion to help the industry overcome the terrorist attacks of Sept. 11.

"The financial damage is and continues to be devastating," Delta Airlines Chairman Leo Mullin told the House Transportation Committee, citing the shutdown of service last week and prospects of sharply reduced business in coming months.

Lawmakers, citing the importance of the aviation industry to the nation's economy, appeared ready to move as early as this week on relief legislation, although several said any package should also include help for the estimated 100,000 airline workers expected to be laid off because of reduced flight schedules.

The major airlines have already announced plans to cut flights back by about 20 percent.

"Our challenge is to restore public confidence in air travel and to revive airline finances so this cornerstone industry ... can recover in the shortest possible period," said Rep. James Oberstar of Minnesota, ranking Democrat on the panel.

Mullin said the industry could suffer anywhere from $18 billion to $33 billion in losses related to the attacks, when hijackers seized four planes, crashing two into the World Trade Center in New York, one into the Pentagon and one in the Pennsylvania countryside.

"I think it's safe to say that among the top 10 airlines that there are three who are on the brink" of bankruptcy, he said. Mullin did not specify those three, but Douglas Parker, chairman of America West Airlines, said his company was one of several that could go under if the federal government does not step in.

Mullin said the industry is hoping for a package of $5 billion in immediate aid and $12.5 billion in credit and loans. He also asked Congress to pass separate legislation specifying that, because the terrorist attacks were an act of war, the airlines should not be liable for fatalities and property damage occurring on the ground. The government should also bear much of the cost for enhanced security in airports, he said.

The House originally suggested $15 billion for the industry in legislation proposed last week and the industry came back with a request for $24 billion. The two sides appeared headed for the $17.5 billion figure after discarding the idea of allowing the airlines to keep ticket and fuel taxes. Those taxes generally go to an airport trust fund that airports can use to improve security.

The airline relief package comes on the heels of $40 billion in emergency spending approved by Congress last week to help victims, fund recovery efforts and pursue the culprits. The Bush administration is in favor of quick action to prop up the industry, while making clear that the aid should be directly related to losses from the attacks and should not subsidize past bad business practices by the industry.

"I do not support signing a blank check," said Rep. Robert Menendez, D-N.J. He said the airlines should share the burden on safety issues and job security and should limit executive pay and bonuses.

Congress should consider including financial relief for displaced workers to any bailout, Teamsters president James Hoffa told the committee. Mullin said 51,000 workers have already lost their jobs and he expected those layoffs to hit 100,000 even with a financial infusion from Washington.

In the Senate, Sen. Jean Carnahan, D-Mo., said she was preparing a $2.5 billion measure to assist laid-off workers.

 
 


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