Gephardt says US airlines may need help downsizing


Aug 20, 2002
Unfortunately, the downsizing of the industry will most likely not be the orderly and painless process that Rep. Gephardt would like to see.

More than likely, the boat will right itself through the shutdown and liquidation of at least one U.S. carrier, and/or drastic cutbacks and consolidation of a few others.

In two years' time, the industry will have a very different look than it does today.


Gephardt says US airlines may need help downsizing
WASHINGTON, Sept 10 (Reuters) - Pessimistic about the airline industry's condition, U.S. House Democratic Leader Richard Gephardt said on Tuesday he thinks another bailout is unlikely but aid might be warranted to assist an orderly downsizing.
In an interview with Reuters reporters and editors, Gephardt suggested airline executives should report to Congress soon about their continued crisis following a year in which Wall Street analysts say the industry lost $10 billion.
Congress approved $15 billion for the airlines last year just 11 days after the Sept. 11 hijack attacks, and Gephardt said he was unsure whether any more legislation addressing the industry's woes was needed now.
But he said one eventual option for Congress might be to pick up airline costs such as health care and pensions that are associated with reorganizing an industry in decline.
Some large U.S. steelmakers have sought, unsuccessfully, to get Congress to pick up some of these legacy costs in order to help them merge as the industry consolidates.
I'm really worried about the airline industry, said Gephardt, a Missouri Democrat. They're struggling with how to stay alive ...
In the end, I don't know that the government can bail them out, unless there's some plan to downsize the whole industry, and for us to pick up some of the costs that are associated with that downsizing, he said.
You may be in a situation where to save enough of the industry, you've just got to help them downsize.
The top U.S. carriers, already struggling before last Sept. 11's attacks involving four commercial airliners, have lost more than $10 billion since and are on track to lose another $6 billion this year and probably next, Wall Street analysts say.
Sixth-largest carrier, US Airways (UAWGQ) , filed last month for bankruptcy protection from its creditors while it tries to reorganize. UAL Corp's (UAL) United Airlines, the No. 2 carrier, has said it may have to do the same.
Traffic remains about 10 percent lower domestically than it was before the attacks, in which jets belonging to AMR Corp.'s (AMR) American Airlines and United were hijacked and slammed into the World Trade Center, the Pentagon, and a Pennsylvania field.
Gephardt said he had spoken recently with American's chief executive Donald Carty, and suggested that Carty bring other airline chiefs to Capitol Hill as had been done a year ago just after the Sept. 11 attacks.
I said ... maybe you need to get the top airlines executives back in here and update us on where you are and what you are trying to do, because it is a very important industry, in every state, the House Democratic leader said.
It would be a good idea, I think, to sit down with them and try to find out what is going on. It's certainly, I think, advisable to try to have a meeting. I'm not at all clear that they need some legislation at this point.
Part of the problem facing the airlines, Gephardt said, was that after the Sept 11 attacks, many business passengers and day passengers who previously took short flights have stayed away.
The government has paid out $4.3 billion of the $5 billion approved for the cash portion of the airline bailout approved last year, but only a small portion of the $10 billion in loan guarantees has been tapped.
Most loan applications have been rejected, and some big airlines were uncomfortable applying because of stringent loan conditions, like giving the government a stake in their business.


Aug 20, 2002
There is already help in place for airline downsizing. It's called the ATSB!


Aug 20, 2002
Visit site
Ya just gotta love Dickie Gephardt.... More government intervention is always the answer, right? They were so helpful last fall, the bailout fixed all the problems, thank goodness we have people like Dick Gephardt to make sure that the GOVERNMENT solves the problems for us! Why let the market take care of those companies who cannot stand on their own, right?

D*** Socialists....