Congress readies airline aid..................


Sep 22, 2002
Congress readies airline aid
House, Senate panels to propose around $3 bln
By William L. Watts,
Last Update: 2:58 PM ET April 1, 2003

WASHINGTON (CBS.MW) -- Struggling airlines appear to have a tailwind behind them in the industry''s efforts to be included in the war-spending bill that''s being rushed through Congress this week.

House Republican leaders agreed to an amendment that would add $3.2 billion to the fiscal 2003 supplemental spending bill considered by the House Appropriations Committee on Tuesday.

Full details weren''t immediately available, but House Majority Leader Tom DeLay emphasized that the aid would be aimed at reimbursing airlines for added security costs resulting from the battle against terrorism.

You cannot call this a bailout, DeLay said. I believe that the industry needs to work through their market problems on their own.

At the same time, the Senate Appropriations Committee was set to begin work on its version of the bill, which includes $2.8 billion in aid.

Top Senate Republicans agreed to the figure late last week, after President Bush unveiled a request for $74.7 billion in additional fiscal 2003 spending to pay for the war in Iraq and for other items tied to fighting terrorism, including homeland security. The administration''s package, however, included no funds for airline aid. See full story.

Earlier Tuesday, White House spokesman Ari Fleischer said the Bush administration was always aware that some lawmakers would attempt to include funds for U.S. carriers in the bill. We''ll see where that comes out, Fleischer said.

Administration''s stance

White House officials have offered only tepid support for helping the airlines, emphasizing that the industry''s woes pre-dated both the war with Iraq and the Sept. 11, 2001, terrorist attacks.

That said, the administration has signaled it probably wouldn''t oppose some modest aid, particularly if tied to helping carriers and airports foot added security costs.

As to the [security] costs, there may be some merit in the idea that recognizing that the war may further aggravate the airlines'' situation, some temporary alleviation of the additional security costs that they have been incurring could have certain logic to it, White House budget director Mitch Daniels said last Friday.

Some lawmakers have expressed a reluctance to provide further help for airlines in the wake of $15 billion rescue package passed in 2001 following the terrorist attacks. Critics of additional airline aid contend that further measures will only postpone painful but needed consolidation among the nation''s carriers.

Differences between the final versions of the bills will need to be ironed out in by a House-Senate conference committee.

The Senate plan would extend government coverage of high-risk war insurance, provide around $1.1 billion to aid with security costs, and waive around $900 million in surcharges.

House and Senate Democrats are expected to offer their own proposals for airline aid.

Sen. Patty Murray, D-Wash., planned to offer an amendment that would add around $1.2 billion to the Senate''s airline provision, with the funds earmarked to aid airline workers.

Airlines argue that they will lose $4 billion as a direct result of decreased travel stemming from the Iraq conflict. The industry estimates that around 70,000 jobs are at stake.

Airline shares were on the rise Tuesday, rallying in response to American Airlines parent AMR Corp.''s (AMR: news, chart, profile) success in squeezing concessions out of employees in a bid to avoid Chapter 11 bankruptcy. See full story.

AMR''s step back from bankruptcy came a day after Arlington, Va.-based US Airways (UAWGQ: news, chart, profile) emerged from Chapter 11, having reorganized as a smaller, leaner carrier with a liquidity position of $1.24 billion.

William L. Watts is a reporter for