Airlines win pledge of government aid 

Chronicle News Service 19sep01

WASHINGTON - Having laid off 44,000 people after last week's terrorist attacks, a staggering airline industry won assurances of billions of dollars in financial help yesterday from Congress and the Bush administration.

The promise of federal financial salvation came on the same day that airline executives said they expected the layoffs to eventually reach 100,000 - a figure that underscores the dramatic drop in ticket sales since the events of last week.

As a result, Boeing Co. announced late yesterday that it plans to lay off as many as 30,000 commercial airplane workers by the end of next year due to an expected slowdown in orders of new jets.

Executives from the nation's major airlines shuttled from the

Transportation Department to the White House to Capitol Hill to plead for help in coping with the economic aftershocks of the attacks.

Transportation Secretary Norman Mineta, who said he hoped to have a package of assistance ready early next week, estimated that the industry has been losing between $250 million and $300 million a day since the government halted all air travel for two days last week after four airliners were hijacked in a single morning. The government imposed severe security requirements to prevent further hijackings, and ridership is down, he said, adding that the airlines have "got to be made whole."

But lawmakers said they had not settled on details of the package and suggested that the aid would come with conditions.

Congressional and White House officials remained on guard to charges by Rep. Lloyd Doggett, D-Texas, that bailing out airlines inadvertently would reward airlines for failing to economize prior to the attacks.

Sen. Ernest Hollings, D-S.C., chairman of the Senate Commerce, Science and Transportation Committee, said that although airlines complained that they were hurting financially, some top industry executives are earning $120 million annually in salaries and benefits.

After their meeting with airline executives on Capitol Hill, lawmakers said the industry had pared its request, dropping its call for a repeal of the 4.3 cent-per-gallon federal tax on jet fuel and for airlines to be allowed to keep the proceeds from ticket taxes.

Industry executives started the day requesting up to $24 billion to get their companies through the next year. They said they were requesting outright grants = including an immediate infusion of $5 billion - plus tax breaks, loans and loan guarantees and protection against some liability claims stemming from the destruction wrought by the hijacked airplanes.

The airlines told the government that some carriers could be

forced into bankruptcy within days and that without help from Washington much of the industry would be financially crippled within months

In addition to layoffs, American, Continental, Delta, Northwest, United, and US Airways have already reduced their schedules by 20 percent. Midway Airlines, in trouble before Sept. 11, ceased operations in the aftermath of the attacks.

United Airlines is expected to announce today that it will lay off 20,000 workers, though it refused to confirm the exact number. Continental Airlines has said it will furlough 12,000 employees, and Midway Airlines said last week that it was shutting down for good. US Airways will lay off 11,000 of its workers; Northwest and American Airlines said they would announce layoffs tomorrow.

In developing an aid package for the airlines, administration officials and members of Congress were grappling with how to separate the financial effect of the terrorist attacks from the economic woes the industry had before last week.

They were also debating whether the government should be given a greater say over schedules and airfares in return for federal help, and the degree to which the industry should be shielded from liability claims stemming from the crashes of the hijacked jetliners.

Leo Mullin, the chairman of Delta Airlines, said the package could be as much as the $24 billion the industry has requested.

Several participants in the meeting said the federal assistance was likely to be close to the $2.5 billion in direct aid and $12.5 billion in loan guarantees that the House had considered but failed to pass Friday night.

Mullin said the government and the industry needed to work together to make sure that airlines did not become "a major economic casualty" of the attacks and, by laying off workers and disrupting commerce, a drag on the overall economy.

For three or four days last week, Mullin said, the industry had almost no revenue due to the grounding of all flights.