- The Washington Times - Tuesday, September 18, 2001

President Bush yesterday ordered the government to develop a "comprehensive" assistance package for the U.S. airline industry after its finances nose-dived in the wake of the Sept. 11 terrorist attacks in New York and Washington.

"The president believes that we should develop a package to help the airlines emerge from the difficulties — a comprehensive package," said White House spokeswoman Claire Buchan. Mr. Bush issued the order after meeting with top economic aides.

Meanwhile, Attorney General John Ashcroft pledged that the federal government would put armed guards on all commercial airlines. He also urged Congress to act quickly on anti-terrorism legislation that would ease restrictions on wiretaps and give law-enforcement officers broader powers to pursue suspects.

The House of Representatives is considering a vote on legislation as soon as this week that would provide $15 billion in grants and credit to the airline industry.

"If we don't act soon, I'm afraid that it will be even more difficult to resuscitate this key industry in the future," said Sen. John McCain of Arizona, the ranking Republican on the Senate Commerce Committee.

Stocks of major airlines and travel-related companies fell sharply yesterday as most carriers operated with schedules 20 percent below normal.

Unless airlines can regain their riders, several could be bankrupt by Christmas, according to industry analysts.

"Because of actions in the last week, fear of flying will be at an all-time high," said Darryl Jenkins, director of George Washington University's Aviation Institute. "For short-haul flights, people are going to take Amtrak or start driving."

Among the airlines most at risk are US Airways, Continental Airlines, AirTran Airways and America West, Mr. Jenkins said. The federal government would need to give the airline industry at least a $10 billion subsidy to save major airlines and the industries that depend on them from financial collapse, he said.

US Airways, of Arlington, announced yesterday that it would cut 11,000 jobs, or 24 percent of its work force, and reduce service nationwide to help stave off bankruptcy.

US Airways is the biggest airline tenant at Ronald Reagan Washington National Airport, which remains closed because of security concerns created by its nearness to the nation's capital.

On Saturday, Continental said it would lay off 12,000 workers, or one-fifth of its work force. Northwest Airlines said it would announce an unspecified number of layoffs later this week.

"If we don't have [the federal bailout], I think you're going to see people filing [for bankruptcy] very quickly," Mr. Jenkins said. "Between now and Christmas, you'll probably see them losing 100,000 employees."

He also predicted a "ripple effect" through the economy that could fuel a recession. Other economic sectors that would be hurt without a federal bailout are financial institutions and insurance companies that deal with airlines, manufacturers like Boeing Co. and service industries like hotels, travel agents and automobile rental companies, he said.

The silver lining would be for passengers offered low fares as airlines try to recover their ridership, he said.

The House Transportation and Infrastructure Committee is scheduled to hold a hearing on an airline bailout tomorrow morning.

The industry already presented Congress with a wish list for assistance that would cost $24 billion. Executives of major airlines are scheduled to meet with White House economic adviser Lawrence Lindsey today to discuss federal assistance.

A bill proposed in the House would give airlines $2.5 billion in direct payments to compensate them. In the last week, the industry has lost about $1 billion. The House bill also would give them a credit line of $12.5 billion.

The funding would be separate from the $40 billion package Congress gave the president last week to pay for disaster relief and an anti-terrorism effort.

Rep. Paul E. Kanjorski of Pennsylvania, a senior Democrat on the House Financial Services Committee, said Congress wants to compensate the airline industry without being a government giveaway program.

"We don't want to end up bailing out airlines that are already dead," Mr. Kanjorski said.

The Senate is taking a more skeptical attitude toward the airlines.

Senate Commerce Committee Chairman Ernest F. Hollings, South Carolina Democrat, said that before the Sept. 11 terrorist attacks, airlines claimed to be insolvent but paid their executives $120 million in salaries and bonuses.

"I would be willing to consider compensation if they give up monopolistic control of the nation's hub airports," Mr. Hollings said.

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