- The Washington Times - Thursday, October 3, 2002

A House subcommittee yesterday approved a rescue plan for airlines that would give them loan guarantees if war erupts with Iraq and make the government compensate victims for acts of terrorism instead of the airlines' insurance companies.
The bill is intended to prevent an industry financial collapse that major airline executives said was likely unless the government intervenes to reduce their costs resulting from the September 11 attacks.
"Last year, the airlines lost some $7.7 billion and will probably lose another $7 billion this year," said Rep. John L. Mica, Florida Republican and chairman of the Transportation and Infrastructure's aviation subcommittee. "The situation is critical."
The losses result from a ban on airlines carrying mail, huge insurance policy increases and government requirements to install reinforced cockpit doors, bomb-detection machines and other security measures.
The bill would reinstate mail deliveries by airlines. It also would make the government pay for new security requirements and war- or terrorist-related damage claims greater than $100 million.
If another war breaks out with Iraq and fuel prices increase at least 25 percent, it would renew airlines' right to apply for federal loan guarantees to secure funding from banks. The airlines have said a war would scare away passengers and drive up fuel prices if Middle Eastern oil supplies are interrupted.
Congress originally created the federal loan guarantee program for airlines last November. It expired in June.
However, the bill is running out of time for approval this year as members of Congress prepare to campaign back home for the November election.
House Republicans want quick approval by Congress. Some Democrats want compensation for laid-off airline industry workers, possibly delaying a vote until next year.
Nevertheless, Rep. James L. Oberstar, Minnesota Democrat, supported the bill. It will save the airline industry $1.5 billion on insurance and security equipment, he said.
"[Thats] half of what the airlines said they need to get on a stable economic footing," Mr. Oberstar said.
The bill would give airlines much of the assistance they requested during a subcommittee on aviation hearing last week.
Executives from American Airlines, Delta Air Lines and others said new security costs required by the government, along with skyrocketing insurance, were driving them toward bankruptcy.
Delta Chief Executive Officer Leo Mullin estimated his airline's new security costs, such as reinforced cockpit doors and bomb-detection machines, at $660 million this year. He also said Delta's insurance policy increased from $2 million to $150 million.
Airline officials welcomed the subcommittee's action.
"This is a step in the right direction," said Tammy Lee, spokeswoman for US Airways, the Arlington-based airline currently in bankruptcy receivership. "Helping the industry will in turn help the economy."
Michael Wascom, vice president of the Air Transport Association, the trade group for major airlines, said, "It was a wise decision to provide the airlines with reimbursement for a variety of unfunded mandates related to September 11."

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