- The Washington Times - Saturday, September 22, 2001

The Senate approved a $15 billion financial aid package for the U.S. airline industry yesterday, intended to rescue carriers from economic collapse caused by the Sept. 11 terrorist attacks that destroyed the World Trade Center and damaged the Pentagon.

The federal funding, approved 96-1, includes $5 billion in grants and $10 billion in loan guarantees over nine months.

Sen. Peter G. Fitzgerald, Illinois Republican, cast the only dissenting vote, saying the government was "panicking with taxpayers' money."

The $5 billion represents the amount airlines say they will lose by the end of this month as a result of having their airplanes grounded and from passengers' fear of flying in the wake of the hijackings. The loan guarantees are tied to higher insurance rates and security costs.

"We will keep our airlines flying with direct assistance during this emergency," President Bush said during a televised speech to a joint session of Congress Thursday night.

After the vote, Sen. Kay Bailey Hutchison, Texas Republican, said, "We want to stabilize our economy."

The $15 billion would add to the $5 billion in emergency funding Mr. Bush released yesterday to various government agencies, part of which is being used to hire armed sky marshals for all U.S. commercial airline flights.

The Bush administration has said the consequences to the U.S. economy from airlines' failure could be devastating unless carriers received money to help them through the plunge in revenue and customers caused by the attacks.

The airlines this week announced layoffs of almost 100,000 employees after losses they estimated at up to $330 million per day while the Federal Aviation Administration grounded their airplanes for two days then gradually restored service. Major airlines are operating with an average of 20 percent fewer flights with 60 percent of their seats empty.

Northwest Airlines announced 10,000 layoffs yesterday. Delta Air Lines has not yet laid off employees but told them to expect layoffs soon.

Airline executives told Congress in hearings this week that it will take a year before customers return in pre-attack numbers.

The debate in the House continued yesterday evening, with Democratic members saying the bill should include compensation for laid-off workers and funding for more security before it is approved.

The legislation also limits the liability of airlines for the attacks that claimed thousands of lives. United Airlines and American Airlines, whose airplanes were hijacked in the Sept. 11 attacks, were at risk of getting sued by victims or their families.

Rep. F. James Sensenbrenner Jr., Wisconsin Republican, said the liability limits are nearly the same as a subsidy for airlines that unfairly transfer their liability to other organizations, such as airplane manufacturers and owners of the World Trade Center.

"If we don't act this week, there will be more layoffs next week," Rep. Roy Blunt, Missouri Republican, responded.

Several lawmakers expressed concern the government might unwittingly spend money to prop up businesses that were failing before Sept. 11.

Sen. John D. Rockefeller IV, West Virginia Democrat, said the bill compensates only financial losses of airlines arising from the terrorist attacks. The amount of financial assistance depends on the number of passengers each airline can demonstrate it lost.

Mr. Rockefeller also said the security issues would be addressed soon in separate legislation.

Ray Neidl, an airline industry analyst for the Wall Street investment firm ABN-AMRO, said the financial aid was sorely needed to prevent the collapse of the industry.

"It's a stopgap," Mr. Neidl said. "The government has done its job to stabilize the industry."

Executives at airlines receiving the loan guarantees must freeze their salaries at no more than they received in the previous year as a condition of the financial aid.

The bailout package was approved the same day Congress held hearings on legislation to improve airline security.

During a House Transportation and Infrastructure Committee hearing, Transportation Department Inspector General Kenneth Mead suggested the federal government control airport security rather than leaving it to the airlines' private contractors.

He recommended that a nonprofit corporation set up and overseen by the federal government hire and train employees to screen passengers and be given greater discretion to determine security needs at airports.

"This should result in more consistent security at our nation's airports," Mr. Mead said.

Until now, airlines have been reluctant to fulfill all federal government recommendations on improving security because it would increase ticket prices and hurt profits.

At the hearing yesterday, the lawmakers discussed adding a $2 to $3 tax to each airline ticket to pay for more security.

"In the past 10 days, it seems like many more people agree it's a good idea," said Rep. William O. Lipinski, an Illinois Democrat.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide