- The Washington Times - Wednesday, September 19, 2001

Congressional leaders and the Bush administration yesterday promised a prompt financial bailout for an airline industry battered by the Sept. 11 terrorist attacks on New York and Washington.

The House version of the bill would give airlines $15 billion in grants and credit to help them recover their losses. The airlines have asked for as much as $24 billion.

Senate Majority Leader Tom Daschle, South Dakota Democrat, said various proposals are being considered and he was uncertain of an exact amount of federal aid. However, he predicted the legislation probably would pass both houses of Congress this week.

"I think it is important for us to realize how time-sensitive this issue is," Mr. Daschle said after a meeting in the Capitol with major airline executives yesterday.

The administration hopes to come up with a financial-aid proposal by early next week.

The industry estimates that it has lost $1 billion in the week since the Federal Aviation Administration grounded the nation's airlines for the first time in history, then gradually restored service with tougher security measures. Carriers are operating at an average of 20 percent less than their capacity, largely because of the fear of flying created by the suicide hijackings.

"Circumstances have already changed since Friday," Mr. Daschle said.

Yesterday, United Airlines said it would cut its number of flights and lay off 20,000 employees. In the previous four days, US Airways, based in Arlington, announced it would lay off 11,000 employees, Continental Airlines said it would lay off 12,000 and Northwest Airlines said it would announce a major layoff of an unspecified number of employees later this week.

The cutbacks in service have led to industry-wide layoffs that are approaching 50,000 and could reach 100,000 by Christmas, analysts said. The airlines are reporting losses of $200 million to $300 million per day.

Transportation Secretary Norman Y. Mineta said the Bush administration recognizes the airline industry has "got to be made whole."

Congressional leaders warned about the consequences of not compensating airlines for their losses.

"This industry is part of the economic foundation of our country," said House Majority Leader Richard A. Gephardt, Missouri Democrat. "We're talking about a whole range of industries that depend on airlines being used." He mentioned hotels, aircraft manufacturers and tourism.

Even after the bailout, new safety procedures will be expensive, he said. He did not say how much they would cost or who would pay for them.

"The airline industry's economic crisis is a direct result of the federal government's decision to ground commercial aircraft last week," said House Majority Whip Tom DeLay, Texas Republican. "We've got to stabilize the major airlines with federal assistance. The airlines are a national economic asset and if they spiral into bankruptcy, our broader economy will suffer unacceptable damage."

United Airlines Chairman Jim Goodwin said the airlines and Congress agreed to "a new safety structure," but he did not give details.

"There are, however, unfortunate financial implications," he said.

As a result of the terror attacks, "We in the airline industry are going to suffer a great deal of financial pain," he said.

The bailout would provide enough compensation to get the industry operating near its previous capacity, but not enough to completely compensate the airlines, the House and Senate leaders said. Even before the attacks, several airlines suffered financial difficulties as a result of tough competition and a slumping economy.

"This is not making up for past bad practices" of the airlines, said Rep. Roy Blunt, Missouri Republican.

Instead, the legislation being crafted in Congress will try to avoid subsidizing failing airlines, but would rescue healthy carriers from bankruptcy.

The Bush administration advised against being too generous to airlines that had financial problems before the terrorist attacks.

"There may be some short-term things that absolutely need to be done" to help the industry, said Karen Hughes, counselor to the president. "But you don't want to subsidize bad business practices."

@$:cDave Boyer contributed to this report.

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