- The Washington Times - Tuesday, February 5, 2002

President Bush's budget would triple aviation security spending, adding funds for new initiatives such as 30,000 new airport security workers and faster installation of technology to detect explosives.
Travelers' fear of flying continues to take a toll on the balance sheets of the nation's major carriers four months after the terror attacks on the World Trade Center in New York and the Pentagon. Lawmakers and the industry hope that increased federal spending on security measures will make the skies safer and make travelers feel better about flying.
Funds for the newly created Transportation Security Administration, which oversees baggage inspections and checks of passengers at each U.S. airport, would be approximately $4.8 billion, compared with $1.25 billion spent last year on similar programs.
The funding includes a 2 percent increase to help the Federal Aviation Administration manage the nation's airspace. Air traffic had been increasingly heavy before the September 11 attacks.
But air traffic remains about 75 percent of pre-September levels, and analysts are unsure when business will recover fully. Earnings announcements from the nation's major airlines late last year revealed that the industry lost about $9 billion.
But analysts say the industry effectively has cut costs by slashing thousands of jobs, eliminating old aircraft and reducing service. Lower fuel costs also are helping.
"The biggest overriding factor into all of this is the economy if the economy comes back, so will the air traffic," said David Stempler, president of the Air Travelers Association, a consumer advocacy group.
Some analysts are optimistic that Americans will shed their fear of flying soon.
"We think things are improving," said Helane Becker, an airline analyst with Buckingham Research Group. "We expect that by mid-February airline traffic will be a little bit stronger and that should help the industry."
Analysts say airlines in good financial shape before September 11 have the best chance of full recovery.
"United was struggling and losing money before September 11; That just magnified that problem," said Joel Denney, airline analyst with U.S. Bancorp Piper Jaffrey.
United, the nation's second-largest airline, lost $2.15 billion ($40.94 per diluted share) last year, or just less than a quarter of the industry's loss.
"But if you look at Continental Airlines, it was doing extremely well," said Mr. Denney. "It took a financial hit like all other carriers, but it's continued to outperform the rest of the industry."
United's woes also stem from some $116 million lost through expenses for its failed proposal to buy Arlington's US Airways, the nation's sixth-largest carrier.
US Airways was hit hard by the temporary closure of Ronald Reagan Washington National Airport, its main hub, after September 11. With 186 daily flights before the attacks, US Airways now has 107 daily flights. It expects to have 153 daily flights by April, a company spokesman said.
American Airlines, the largest U.S. airline, also is having problems increasing flights. The carrier was trying to enter a trans-Atlantic partnership with British Airways to compete with alliances abroad. But the deal fell through last week when regulators issued requirements the airline saw as too difficult.
American and Delta, the nation's No. 3 carrier, were less affected by the September 11 attacks because they had liquidity and operations spread throughout the world.
Northwest and Continental, the nation's No. 4 and 5 airlines, respectively, have remained strong performers, analysts say.
Lower-fare carriers are performing better than the majors.
Southwest Airlines posted a 16 percent sales increase to $49.25 million in 2001 from $42.34 a year earlier.
"Southwest remains as it was before September 11: low-cost, fast growing and performing well," Mr. Denney said.
Frontier Airlines also is expected to post profits for this year.

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