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Airlines Ask For Billions in Aid to Head Off Bankruptcies, Layoffs

By Melanie Starkey
Capital News Service
Wednesday, Sept. 19, 2001

WASHINGTON - Airline officials told Congress Wednesday that they expect to cut 100,000 jobs -- hundreds of which lawmakers fear would be in Maryland -- and that the cuts will be even deeper without billions of dollars in immediate assistance. 

In testimony to the House Transportation and Infrastructure Committee, the airlines said they lost $220 million a day during last week's government-imposed shutdown. They said they face further losses due to eroded consumer confidence after the Sept. 11 hijacking of four commercial airliners. 

Industry representatives are pushing for an immediate cash infusion of $5 billion, which would not be paid back, part of a $24 billion package including grants, loans and tax deferments. 

"There is no question there has to be a federal role in the buttressing of an economic freefall," said Rep. Wayne Gilchrest, R-Kennedyville, and a committee member. He noted that US Airways, the second-largest carrier at Baltimore/Washington International Airport, announced plans Monday to cut 11,000 jobs. 

Gilchrest said he hoped BWI employees would escape the cuts, since BWI is a major hub for the airline, but it would ultimately depend on how many flights US Airways could book into and out of the city. "The potential for losing several hundred positions out of Maryland is very real," said Gilchrest. 

Airline industry losses would eventually trickle down to the rest of the travel industry in Maryland, affecting travel agencies, hotels, restaurants, car rental centers and others, Gilchrest said. 

Delta Airlines Chairman and CEO Leo F. Mullin testified that the nationwide air shutdown, coupled with a drastic and probably prolonged drop in passenger demand, means bankruptcy followed by liquidation for many airlines. Mullin said that bankruptcies could occur within days without immediate government help, especially once airlines learn of their liability in the lives and property lost both in the air and on the ground. 

The industry foresees layoffs of more than 100,000 employees, even with government help, Mullin said. Leaders said they hope to rehire many, once business begins to return to levels before last week's attacks, although none predict a 100 percent recovery. 

Gilchrest said that, based upon the amount of revenue lost in the shutdown, "there will be a substantial amount given that won't be paid back" by the airlines, even if they get back on their feet. 

In addition to financial aid, the industry asked that the federal government take over all security screening functions and provide sky marshals on domestic flights. They also asked for money to meet safety requirements, such as reinforcement of cockpit doors and enhanced screening devices. 

Rep. Peter DeFazio, D-Ore., suggested airlines add a $3 security surcharge to tickets, an idea that Gilchrest supported. "I think this is the time when a surcharge would be greeted by the flying public as something they would be willing to pay," Gilchrest said. 

But airline representatives balked, saying such a surcharge could make a substantial difference in ticket sales for carriers with very close prices. 

The industry also asked for legislation to free airlines from liability for damage to persons and property on the ground and to let companies meet to discuss capacity reductions. 

Reps. Robert Ehrlich, R-Timonium, and Steny Hoyer, D-Mechanicsville, both said they supported federal aid to the airline industry. A spokeswoman for Rep. Roscoe Bartlett, R-Frederick, said he had not yet determined which proposals to support, but that "restoring and maintaining safe air travel for people and goods is a federal responsibility." 

Supporters of the airline package said they hope to quickly move a bill through the House and Senate and get it to President Bush's desk by next week.

Copyright 2001 University of Maryland College of Journalism

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