- The Washington Times - Thursday, September 20, 2001

From combined dispatches
President Bush will ask Congress to give the nation's beleaguered airlines $5 billion in immediate cash aid plus significant help with their insurance liability but not, for now, the loans that the industry says it needs to avert bankruptcies, an administration official said yesterday.
Mr. Bush will immediately spend $3 billion of the emergency funds that Congress gave him over the weekend to pay for airline- and airport-security improvements, such as fortified cockpits, sky marshals and additional airport searches.
Under the proposal, the federal government would give airlines "temporary terrorism risk insurance" on all their domestic flights for 180 days. Only international routes have such coverage now.
Mr. Bush is also proposing to help shield airlines from inevitable lawsuits related to last week's terrorist hijackings. He would bar punitive damages and consolidate all lawsuits into a single federal court, the U.S. District Court for the Southern District of New York. The government would also pick up whatever cost of compensating victims for damages ultimately exceeds the limits of the airlines' insurance policies.
The administration official, who provided details of the proposal on the condition of anonymity, said the president believes such measures are the "essential steps for immediate safety and stability" and, once they are enacted, he and the Congress will talk about loans in order to bolster the airlines' longer-term solvency.
Airline executives' pleas for $17.5 billion in financial aid to help them recover from the Sept. 11 terrorist attacks met with generally encouraging responses from Congress yesterday.
"I am 100 percent for this package," said Rep. Elijah E. Cummings, Maryland Democrat. "We must not let the terrorists succeed. What they want is fear."
Customers' fear of flying after the attacks that destroyed the World Trade Center, damaged the Pentagon and caused thousands of deaths is projected to cause anywhere from $18 billion to $33 billion in losses for the airline industry, the executives said. By the end of this month, losses are expected to reach $4.7 billion as the airlines continue to operate at 20 percent less capacity than before the attacks.
About 70,000 layoffs of airline employees already have been announced, 20,000 of them yesterday by American Airlines. The figure could grow to 100,000 within months, the executives said.
"It could put the national economy into a tailspin" if the government does not assist the airlines, said Rep. James L. Oberstar of Minnesota, the ranking Democrat on the committee. "I hope we can have a package on the floor by the weekend."
He also mentioned losses suffered by industries that depend on airlines, such as hotels, tourism and manufacturers.
"The financial damage is and continues to be devastating," said Leo Mullin, Delta Airlines chairman. He said three of the top 10 airlines were close to bankruptcy.
Industry analysts have said the airlines most likely to suffer severely are America West, US Airways, AirTran Airways and Continental Airlines.
The House originally proposed a $15 billion bailout that would include $2.5 billion in grants and $12.5 billion in credit. The airline industry was asking for $24 billion.
During the hearing yesterday, both sides appeared closer to the $17.5 billion figure. They threw out an idea discussed earlier of allowing airlines to keep ticket and fuel taxes, which support a trust fund that pays for security improvements.
The Bush administration has said it favors a quick response to shore up the airline industry. However, the administration as well as several congressmen yesterday warned against propping up airlines that were about to fail even before Sept. 11. "I do not support signing a blank check," said Rep. Robert P. Menendez, New Jersey Democrat.
Both the Bush administration and the House Transportation Committee want assurances the money they give airlines compensates them only for their losses after the attacks.
Tom Ramstack contributed to this article, which is based in part on wire service reports.

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