- The Washington Times - Friday, March 28, 2003

Key members of Congress plan to announce a financial assistance package for airlines next week to help them survive crushing financial losses since war erupted with Iraq, according to congressional aides.
Although details still are being worked out, one Republican aide yesterday called the package an attempt to reimburse airlines for "whatever costs they incur for security because of the war."
Representatives from five major airlines met with congressional leaders yesterday to ask for government assistance.
Members of Congress who participated in the meeting said the federal government would help airlines but did not explain how.
"A healthy airline industry is key to a strong economy and our nation's security, so it is the responsibility of Congress to be a part of the solution," said Rep. Steny H. Hoyer, Maryland Democrat. "To not act is not an option."
Rep. James L. Oberstar, Minnesota Democrat, said airlines already were shouldered with a heavy burden of security costs.
"We must not force them to bear a disproportionate share of the direct and indirect costs of a war with Iraq," he said.
Last week, Mr. Oberstar proposed a $4 billion to $5 billion aid package for airlines. It would include the government assuming most of the costs of war insurance, loan guarantees and release of oil from the nation's Strategic Petroleum Reserve to keep jet fuel prices down.
Rumors of government assistance for U.S. airlines prompted their European rivals to issue a statement yesterday complaining about unfair competition.
"While European airlines prepare to measure the impact of the war, carriers in the USA appear to be successfully lobbying for a massive government bailout," the Association of European Airlines said in a statement.
The European association pledged to "resist this at the highest political level."
Any government financial aid needs to come quickly.
US Airways yesterday announced another 5 percent reduction in its flight capacity on both domestic and European routes.
"Because of the war in Iraq, we have adjusted our operation in a way that limits the impact to our customers," said B. Ben Baldanza, US Airways vice president.
Since the September 11 attacks, the bankrupt Arlington airline has reduced its capacity by 28 percent.
Reuters news agency quoted unnamed business sources saying American Airlines, the world's largest carrier, is likely to file for bankruptcy protection next week.
Shares of AMR Corp., the parent company of American Airlines, fell 40 cents to $1.79 yesterday.
The airline gave itself until March 31 to win labor concessions and other cost reductions needed to hold off bankruptcy but seems to be falling short of its goals.
Also this week, Delta Air Lines announced it would reduce its capacity by 12 percent.
Standard & Poor's credit-rating service predicted yesterday the airline industry would lose $6.5 billion this year, not including war-related costs.
"The U.S. airline industry is in dire condition," S&P; airline industry analyst Jim Corridore said in his latest industry survey.
The Air Transport Association, the trade group for major airlines, predicted before the outbreak of hostilities in Iraq that the airline industry would lose an additional $4 billion this year if there were a war.
This week, the group said bookings for the next 60 to 90 days "suggest no relief is in sight."
Domestic bookings are down more than 20 percent from a year ago, when the airline industry already was hurt, the association said. Atlantic bookings are down 40 percent, Latin American flights fell 15 percent, and bookings for flights across the Pacific are down more than 30 percent.

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