19 September 2001

U.S. Airlines Ask Congress for $17,500 Million Aid Package

By Andrzej Zwaniecki
Washington File Staff Writer

Washington - U.S. airlines immediately and urgently need more than $17,000 million to survive in the aftermath of the September 11 terrorist attacks, said Leo Mullin, Delta Air Lines chairman, speaking on behalf of the U.S. airline industry.

In a September 19 testimony before the House Transportation and Infrastructure Committee, Mullin asked Congress to approve a "transition aid" package worth $17,500 million to help stabilize U.S. airlines' finances. The package is to include $5,000 million in cash and $12,500 million in loan guarantees to cover lost revenue for the period extending to July 30, 2002.

Without help, Mullin said, "almost no airline is strong enough to survive for long, facing the upcoming challenges." These challenges include weaker demand, rising operating costs and airlines' reduced ability to borrow money.

The industry has also asked Congress to pass legislation protecting airlines from liability related to damage on the ground caused by terrorist attacks. Mullin said an avalanche of lawsuits against airlines was likely to limit their ability to raise capital and purchase necessary insurance.

Moreover, the industry is calling for the government to create a unified air security system by funding new safety measures, improving intelligence gathering and providing sky marshals on domestic flights. The industry is also urging the government to take over all security screening operations from private sector contractors. Mullen said a stronger government role in aviation security would "address the issues at the heart of public concerns resulting from the events of September 11."

Also testifying before the committee, James Hoffa, president of the labor union representing employees of airline and airline-related industries, expressed support for the financial rescue package but asked Congress to include in it financial relief for displaced workers. U.S. airlines have already announced plans to cut 51,000 jobs and estimate that layoffs may reach 100,000 in coming months.

Committee members, generally, expressed support for a swift action on the airline rescue bill. "We have to get this done as soon as possible or we will not have an air transportation system", said chairman Don Young, an Alaska Republican.

Some committee members questioned certain parts of the package proposed by airlines. Peter DeFazio, an Oregon Democrat, said costs of new security measures should be passed on to passengers rather than the government. He said passengers wouldn't mind paying few dollars more for a ticket knowing that additional money would cover improved security.

In a prepared statement, California Democrat Ellen Tauscher expressed reservations about the government providing 100 percent loan guarantees. Financial markets should take care of at least a portion of the loans, she said, "otherwise, the government will be in the business of determining which airlines will survive."

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