Copyright 2001 Federal News Service, Inc.  
Federal News Service
September 19, 2001, Wednesday
LENGTH: 43455 words

HEADLINE: HEARING OF THE TRANSPORTATION AND INFRASTRUCTURE COMMITTEE
 
SUBJECT: AIRLINES' FINANCIAL FUTURE
 
CHAIRED BY: REPRESENTATIVE DON YOUNG (R-AK)
 
LOCATION: 2167 RAYBURN HOUSE OFFICE BUILDING

WITNESSES: JAMES HOFFA, INTERNATIONAL BROTHERHOOD OF TEAMSTERS; LEO MULLIN, DELTA AIRLINES, ET AL.
 


BODY:
REP. YOUNG: (Sounds gavel.) The hearing will come to order.

I'd first like unanimous consent that Mr. Abercrombie from Hawaii be allowed to sit at the dais, Mr. Underwood from Guam to sit at the dais, Mr. Doggett can sit at the dais -- it does not mean that they will participate in the questioning or comments at this time.

We are here today to address the threat of the continued stability and viability of our U.S. air transportation system. The terrorists who attacked our country last week were trying to destroy our way of life and our economy. We must not let them do that. They have murdered thousands of innocent people, destroyed billions of dollars in property, and dealt a terrible blow to the air transportation system that is vital to the economic health of our country.

On September 11th, 2001, the FAA grounded every airplane in this country within the two-hour period. This was necessary for the safety and protection of our country and our people.

(Cross talk.)

REP. YOUNG: (Sounds gavel.) The committee is not in order.

I want to commend the FAA and the air traffic controllers especially for their quick response and decisive action. I also want to commend the aviation industry for their cooperation and willingness to put the safety of others first.

Unfortunately we are now facing a serious crisis in our air transportation system, which I recognized the day of this terrible tragedy. The reduction of schedules and flights have started, and layoffs have been announced. The capital markets are not coming to the aid of most of the airlines. We are seeing the ripple effect in our economy as layoffs occur in other related industries. Our economy is at risk.

My colleague Mr. Oberstar and I introduced H.R. 2891 to keep the U.S. air transportation system viable as we worked with all the affected parties on other legislation. We expected and wanted to pass that last week but were unable to do so.

In the coming weeks we intend to address other issues, such as safety, security, economic impacts on other affected businesses, and how to address the future liability and insurability of this industry.

Certainly the airports, the general aviation sector and the air cargo industry and the manufacturers all have valid concerns which need to be considered in the future. I am sure that Chairman Mica and the Aviation Subcommittee will thoroughly review all of these issues as their hearings continue this week and next week.

H.R. 2891 authorizes the president to provide loans, loan guarantees and other assistance to air carriers, and also to compensate those carriers who can't document direct losses because of the action of our government to protect our national security. This assistance is intended as a short-term emergency response to keep the air transportation system operating for the benefit of the American people. We will take further action in the near future to address solutions for other airlines and airport functions, such as further upgrading airport security. I know many of you are concerned about airport security and losses sustained by other businesses. However, I urge all of the members of this committee to focus today on the issue of how best to ensure the continued operation of our air transportation system.

We have additional hearings, I am sure additional legislation next Friday and next Tuesday on airline security issues and other issues. I urge you to participate in those hearings to learn what is being done right now using the emergency funds already appropriated to increase security for the flying public.

The current crisis requires this bill to become law as quickly as possible to protect the well being of all Americans, by preserving a functioning air transportation system. I urge the members of this committee to fully support the effort to pass this legislation this week. I know that some would like to delay and also add to, and I understand that. But keep in mind this is the beginning of a product. This is a two-way street. We have to go to the Senate, the Senate has to act, the administration has to act, and we have to get this done as soon as possible or we will not have an air transportation system.

I believe this is an important hearing, and we need to hear from these witnesses. I want to bring this bill to the attention of the House floor as soon as possible. Therefore, in the interest of moving quickly and to ensure that all members have an opportunity to have their questions answered, I would ask that we refrain from lengthy opening statements, and would ask unanimous consent that members limit their opening statements to no more than two minutes. And if you can see your way, do not use those two minutes.

We will welcome written statements which will be introduced in the record for the proceedings. At this time I recognize the gentleman from Minnesota, Mr. Oberstar.

REP. JAMES OBERSTAR (D-MN): Thank you, Mr. Chairman, first of all for recognizing the urgency of the situation and scheduling the hearing in the aftermath of last Friday's unfortunate circumstance on the House floor.

We meet at an extraordinary moment in aviation history, under the most inconceivable scenario for commercial aviation: a confluence of forces that has put this industry, a $600 billion sector of our national economy, 10 percent of our six and a half trillion dollar gross domestic product, teetering on the edge of an economic abyss. Our challenge is to restore public confidence in air travel and to revive airline finances, so that this cornerstone industry which represents American mobility and economic growth can recover in the shortest possible order.

But if we address only the dire financial circumstances of the industry and do not at the same time elevate security, air travelers will have little confidence that they can fly safely, and airline load factors will not improve. But if we elevate security without addressing airline financial liquidity, there will be no aircraft for passengers to board.

The industry's current dire circumstances resulted directly from the September 11th terrorist attack and the USDOT ground-stop order, ordering all aircraft not to fly. There is no comparable precedent -- not the Lockheed situation, not Chrysler, not New York City in the 1970s, not natural disasters -- not even the Gulf War wreaked such havoc on one industry.

Today's hearing will focus on the industry's financial problems. There are three essential points. A strong airline industry is essential to our national economy. The airline industry has suffered immense and unprecedented financial damage from September 11th and its aftermath.

Third, unless substantial financial assistance is made available immediately, a major portion of the industry will fail over the next several months. We will come out of a recovery period, if we do, with at best a non-competitive weak industry of only a few carriers, no viable survivors, no low-fare competitors, and the prospect of government reregulation or government takeover -- higher fares, less service will be the result. We can invest now and try to restore a sound aviation system, or we can ignore the problem and incur greater costs, severe economic damages and the loss of our aviation system.

There is no doubt in my mind that a healthy commercial airline system is vital to the U.S. economy and to our national defense. Last year 1,200,000 U.S. airline employees served 670 million passengers traveling 700 billion miles, carrying 25 billion ton miles of freight. Aviation, at 10 percent of the gross domestic product, is the cornerstone upon which all other elements of our society rely for economic growth. The opportunity in the U.S. and abroad to travel by air for business has fostered enormous economic growth in electronics, manufacturing of aircraft, communications and tourism, which itself is a $1.6 trillion economic sector.

Leaders at every level are emphatic that the pivotal element in expanding business is aviation. In addition, the credit markets have over $150 billion of exposure to U.S. airline debt and lease obligations. The federal government benefits from a robust aviation sector. Last year this industry generated $30 billion in government revenues in the aviation trust fund, airport charges, user fees -- $10.2 billion in employee and federal and state income taxes and federal Social Security taxes paid by airline employees; $2.2 billion in federal corporate income and property and other taxes. The primary aircraft and engine manufacturers are also major U.S. defense contractors. If this industry slides into bankruptcy liquidation, our defense sector will be seriously undercut.

The catastrophic events of last Tuesday have left this industry reeling. This on industry each day incurs expenses of $300 million, whether they operate or not. Each day that aircraft are grounded they are losing operating expenses of $120 billion a year, which translates down to $300 million a day. Not only have load factors dropped to 40 percent, with flights flying at 80 percent of pre-September 11, but yields are also down. That's a reduction in almost 50 percent of revenue.

If this industry is operating at daily revenues of $150 million, the losses are colossal -- cannot sustain those losses for long. Witnesses will go into more detail. I just want to emphasize that a failure to act will drive the airlines into bankruptcy and liquidation.

A final comment. The front line of terrorism is not airport security positions. The front line of security is our national intelligence and counterintelligence services. I am haunted by an observation made on our Presidential Commission on Aviation Security and Terrorism. The commission recommends a specific unit within the intelligence community whose principal function will be long-term strategic thinking and planning on terrorism. The object is to anticipate future terrorist strategies and tactics rather than simply react to incidents as they occur. That recommendation has never been put into effect. That I think is a reason we are here today. Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. I am using my prerogative as chairman, of Mr. Hoffa, if he would come on the first panel, I would deeply appreciate that. There is room down at the end of the table, if you can get a chair or sit right at the end of that table -- James Hoffa is general president of International Brotherhood of Teamsters.

At this time I recognize Mr. Petri for two minutes, if he wishes to use it.

REP. THOMAS PETRI (R-WI) : Thank you. I'd like to commend you, Mr. Chairman, and the ranking member, for promptly addressing this urgent situation and scheduling this important hearing. The tragic events of September 11th have touched us all, and in particular the aviation industry has been devastated by the terrorist attacks and by their aftermath.

Just yesterday, Midwest Express Airlines from my home state announced that it was cutting its operations by 15 to 20 percent in October, which will obviously have a significant impact on jobs. The devastation that has wreaked so much havoc in the aviation industry has ripple effects throughout our economy. It is appropriate that the aviation industry, which has been directly impacted and is so important to our economy and to our way of life, receive assistance under these circumstances. However, I am also concerned about where we draw the line for assisting those industries affected by these tragic events. Many industries and businesses will surely have credible claims that they too have been adversely impacted by these attacks and deserve government assistance. So I look forward to working with my colleagues as we finalize an appropriate package to assist the devastated airline industry. And I thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. Yes, you're up, Mr. Borski.

REP. ROBERT BORSKI (D-PA): Thank you very much, Mr. Chairman. I want to compliment you and our distinguished ranking member for holding this hearing. This committee room, Mr. Chairman, has been the scene of many great successes because we work so well together in a bipartisan fashion, and I have great confidence that you and Mr. Oberstar will lead us through this crisis as well.

I spent a couple hours yesterday in Philadelphia meeting with our airport director and his close staff. And I just want to echo what Mr. Oberstar had mentioned in the beginning of his statement, Mr. Chairman. I know this hearing is on the viability of the airlines. But there is no question in the people running the airport in Philadelphia that the viability of the airlines will never be complete until people feel secure that they can fly safely. I know we will have hearings coming up in a day or two on security, but again I think it is a crucial piece of anything that we move to go forward to make sure that security is dealt with in an event manner.

I am also extremely concerned, Mr. Chairman, while there is little doubt that we need to step up to the plate and to help the airline industry in a significant fashion, there are also many questions that I have, however. We have heard recently the staggering numbers of layoffs that are to be taking place. Will they happen even if we are able to come up with a significant financial package? If not, what is the money that we are being asked to go for? So, again, Mr. Chairman, let me thank you for having this, and I really look forward to hearing from our witnesses.

REP. YOUNG: I thank the gentleman. Mr. Boehlert?

REP. SHERWOOD BOEHLERT (R-NY): Thank you, Mr. Chairman. While we continue to struggle with the reality of last week's attacks and the unimaginable toll these events have taken, we are here today to face yet another crisis, the stability of our nation's airline industry. And we have reason to be greatly concerned. One need only to look across the Potomac at Reagan National Airport to comprehend the economic devastation inflicted upon our air carriers -- planes grounded, silence in the terminals, local unemployment lines packed with many victims of a veritable breakdown experienced by the service industry. Similar scenes are playing out all over the country. Major carriers are operating at only a fraction of their capacity. This is not a sustainable condition. Airlines are of critical importance to our nation's mobility and economy. This hearing is an important first step -- and I emphasize first step -- in averting a tide of economic havoc. We need to start with a comprehensive and responsible stimulus package to revive our air carriers. This should include an immediate stop-gap cash infusion.

Although financial stability is our primary focus today, the safety of our nation's air service is and should remain our primary concern. And that will be the subject of other hearings. I for one wish to give serious condition to the federalization of airport security. Let me add though that we must be mindful of the additional funding that will likely be required to meet these critical mandates. In this instance let me suggest it is not as important to count the costs as it is to consider the cause. Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. Mr. DeFazio.

REP. PETER DEFAZIO (D-OR): Thank you, Mr. Chairman. First, my condolences to the representatives of the airlines here today for the direct losses suffered by members of the airline family.

You know, the terrorists will win if they destroy our vibrant aviation industry. So, it's appropriate this committee take action. But we also have to look to precedents in doing this, and there are ample precedents. We've got Chrysler, Lockheed, New York, most recently, steel. Every one of those has a model, and the model is not followed in the proposed legislation. You set up an emergency loan guarantee board made up of Federal Reserve, Commerce secretary, Treasury secretary and others. They audit the requests. They go through a process to follow. We don't just take and hand out two or five or ten billion dollars. So, we need to look to those sorts of precedents. We need to build in those sorts of procedures.

I'm looking for a shared burden here. I've already heard an awful lot about the tens of thousands of employees who are losing their jobs. In these past assistance packages, the burden has been shared by management, by stockholders, by other creditors, and most assuredly by the insurers. And we need to make certain that we are not preempting those responsibilities and that shared burden in this legislation.

There are others that are directly related. I've heard they're going broke already -- travel agents, general aviation is still suspended for VFR, hotels, airports, the airport businesses. You know, we cannot just restrict ourselves to -- to this one part of the industry if we're going to have a vibrant and comprehensive travel/tourism/transportation sector.

And then finally security. And this is a precondition with me in supporting anything. I introduced my first bill on enhanced aviation security, screening at airports and baggage, in 1987. And every time I've raised those issues over 14 years, the ATA and representatives of the industry have come in and said it costs too much.

REP. YOUNG: The gentleman's time --

REP. DEFAZIO: I want to know that we will get whole-hearted support for measures like a ticket surtax and others to pay for needed security measures before I vote any assistance.

REP. YOUNG: I thank the gentleman. At this time, Mr. Duncan.

REP. JOHN DUNCAN (R-TN): Thank you very much, Mr. Chairman. And I certainly appreciate your calling this hearing and the attendance -- your calling this hearing, and the attendance here today by members and all of the people who are here today. And it certainly indicates the gravity and seriousness of the problems with which we deal. And I think Mr. DeFazio has made several good points, and I believe that whatever package we craft out of the -- this situation will have a burden that is shared by all.

I, too, and concerned about other parts of the industry. Just yesterday, I had a call from an owner of a travel agency who said he was about to go under. I had a call from an owner of a car rental agency and he said he was about to go under. Just as I left Knoxville this morning, an airline employee came up to me. He told me he had been given two weeks notice on being laid off. And so this is a tremendous problem.

I don't -- I don't believe that -- I'm already starting to work with you, Mr. Chairman, and others in coming up with some proposals, and I think we can come out of this with a good package. We do need to help the aviation industry in the strongest way that we possibly can because it affects everything else that we do in this country.

One last thing I would say is, I certainly hope that we open National Airport up -- back up as soon as possible. If we're going -- we need to remember that the most serious losses were in New York City and the Pentagon attack came from Dulles Airport. If we're going to keep National Airport closed, we might as well close down every major airport in this country.

So, we need to get things back to normal as quickly as possible. And your calling this hearing, and the actions that you have demonstrated thus far, Mr. Chairman, are a big -- are big steps in that direction, and I salute you. And I want to work very closely with you and Ranking Member Oberstar in coming up with the proposals that we need to enact at this time.

Thank you very much.

REP. YOUNG: I thank the gentleman. Mr. Clement.

REP. BOB CLEMENT (D-TN): Thank you, Mr. Chairman. I agree with Mr. Duncan. We should open up Reagan Washington National Airport again, as well as our concern for general aviation as well, that's really suffering.

The stunning acts of terrorism committed against our nation last Tuesday have forever altered our country's consciousness. As we all watched with horror, two great symbols of American prosperity and strength were severely damaged. The World Trade Center collapsed into rubble and the Pentagon sat torn, scarred and burning. But another great symbol was damaged as well. The weapons deployed against us were not foreign missiles or homemade bombs, but our own aviation industry. Four hijacked commercial jetliners, symbols of American mobility and freedom, were turned into machines of destruction. As this happened, our entire transportation network came to a sharp, shuddering halt. Our economy stopped and our freedom of travel was suspended. One of our most essential industries had become the third target of the terrorist aggression.

Today, the industry reports that it has sustained upwards of $3 billion in losses following Tuesday's tragedy. The future looks even worse. With a sluggish economy and an anxious grieving public, air travel demand is expected to severely decline at levels up to 60 percent within the next few months. Already, airlines have cut thousands of workers, and the continuing hemorrhaging of cash, as well as the impending liability issues, stand to throw several carriers into bankruptcy and even eventual liquidation.

Tuesday's acts of terrorism are directly responsible for the current economic crisis facing the U.S. airline industry. If we do not come to the assistance of this essential sector, we will have let such terrorist acts claim hundreds of thousands of more victims. Collectively, our nation was unprepared for --

REP. YOUNG: The gentleman's time is --

REP. CLEMENT: -- for the sophistication and scope of these attacks.

REP. YOUNG: The gentleman's --

REP. CLEMENT: We must not let them also destroy our mobility, our workers' livelihoods, and the economic solvency of our great nation.

Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. Mr. Gilchrest.

REP. WAYNE GILCHREST (R-MD): I thank the chairman.

Sixty years ago, Franklin Roosevelt said, I quote, "This generation has a rendezvous with destiny." And it has now happened again. This generation, the one we are a part of, has a rendezvous with destiny, and it is time for the collective heart and mind of America to be focused to meet the challenge.

Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. Mr. Costello -- he's not here. Ms. Norton.

MS. ELEANOR HOLMES NORTON (D-DC): Thank you, Mr. Chairman.

The September 11th terrorists have already scored a short-term victory with the close down of National Airport. If you close down National Airport and you're one of these terrorists, for them, that's the functional equivalent of closing down the nation's capital, because many, many Americans cannot get there to here. We must not give them another victory in the close down of major airlines and the effect that would have on countless workers and communities.

Yesterday, members of the Virginia and DC delegations met with Jane Garvey of the FAA on her way to the National Security Council. You can imagine we gave her an earful. We also discussed everything you've been hearing about federalization and locked cockpits. We said you ought to make this region the pilot for the rest of the country, because if you can show you can keep National Airport open, you'll be able to keep every airport open. At Dulles, some pilots had to out the window last night. We thought there was another hijacking because we still don't have it together. Of course, that was a false alarm.

But we stressed to her not only the need to open National Airport, with its huge symbolic and economic ramifications for our country, but the domino effect -- first you close National Airport, or you leave it closed for too long, next you cripple the airlines that use National with radiating effects on other airlines, and finally you have major, long-lasting effects on the American economy itself. All of these effects are vitally linked to security. Saving our airline industry is a two-sided problem. First, it is a financial problem, so they'll be able to fly, but that is vitally linked to the security problem, so people will want to fly, especially to National Airport.

Finally, may I say that I think our Congress, beginning with this committee, has a separate problem. Can we get our act together in time to save aviation as we have known it? It starts with this committee. I have already felt the effects here where I live. We've got to take care of this right now before the rest of you feel the same effect.

Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentle lady. Mr. Horn.

REP. STEPHEN HORN (R-CA): Thank you, Mr. Chairman. Let's get going. I yield back my two minutes so we can get to work with the --

REP. YOUNG: I thank the gentleman and his wisdom. Mister -- who is next? Mr. Menendez.

REP. ROBERT MENENDEZ (D-NJ): Thank you, Mr. Chairman. I think it's important to say at the start that everything we do in dealing with this tragedy, we need to keep foremost in our minds the families who lost their loved ones, many from my district, including the passengers and employees of our airlines. The human tragedy is our largest toll.

But make no mistake: We need to make sure our nation's air carriers survive this crisis. Air travel is critical to us all. It's no longer a luxury. It's a necessity. Our airlines are the arterial vein of American commerce. They're essential to our travel and tourism industries. They bring our people together, making sure families spread across the vast nation can stay connected. They employ hundreds of thousands of people, such as Continental Airlines in my own district in Newark.

Part of pulling together as a nation is rallying behind those sectors of our economy that are hurt by this tragedy. And as we do this, the safety of the flying public needs to be job one. It's clear to me that you can have all the high-tech devices in the world, but without well-trained people operating and monitoring them and without a comprehensive security plan, of which technology is just one part, they are of little value.

It may be time for the federal government to step in and take over the security function, but we're still going to need the industry's full participation and cooperation.

Lastly, I strongly support providing aid to the airline industry to help them through this rough period, but I do not support signing a blank check. I think it's fair to ask some things in return that in the end will ultimately benefit us all, things like taking proactive responsibility for safety issues, guarantees for labor, and considering limitations on executive pay and management bonuses.

I know you can agree that it's not fair to lay off employees and ask the American people to use taxpayer dollars at a time like this if that money is used for executive compensation. Sacrifices need to be made by all. There's no doubt in my mind that the airline industry will thrive again, just as America will.

Thank you, Mr. Chairman. I yield back the balance of my time.

REP. YOUNG: Mr. Mica, chairman of the subcommittee, will also conduct hearings as time goes by. Mr. Mica.

REP. JOHN MICA (R-FL): Thank you, Mr. Chairman. And let me announce to the members that the Aviation Subcommittee will meet in this room at 10:00 on Friday and we will begin the hearing process on security issues. Next Tuesday at 10:30 we will take up other issues and others affected by this tragedy.

I want to take a minute just to thank you, Mr. Chairman, for the leadership not only today, but the work you did last week behind the scenes and on the floor trying to get this measure to the Congress immediately. I also want to take a minute and thank the ranking member and others who worked tirelessly the last week in trying to get our aviation system back to normal, and also the staff. Staff have been working around the clock to try to get, again, us back flying and in place.

My colleagues, never before in the history of American aviation has our air service industry faced a disaster of this magnitude. In addition to the unprecedented loss of life and property from the terrorist acts of September 11th, the economic damage to the United States will have both a short- and long-term impact on all of us.

Without our aviation industry returning to normal, business, industry and tourism and travel have no hopes for recovery. Aviation accounts for 11 percent of our gross domestic product in the United States. It impacts every part of our economy.

I also want to say that I've been contacted by hundreds, literally thousands of folks, about general aviation. I'm pleased that the administration will probably announce today the restart of some general aviation on an incremental business, we've been informed. Hopefully that will take place today, because I know that thousands of small businesses who rely on our air system are in danger of closing their doors.

Finally, Mr. Chairman, again, I want to thank you for your leadership and others, and look forward to working with you in the days and weeks ahead.

REP. YOUNG: I thank the gentleman. Ms. Brown.

REP. CORINNE BROWN (D-FL): Thank you, Mr. Chairman. And thank you for holding this hearing. First of all, if there's a roll-call vote on opening Washington National Airport, I'd vote to open it. We cannot let the terrorists win.

Last Tuesday's terrorist attack crippled the airline industry, which is the heart of the American economy. U.S. Air, which is my carrier, has already been laying off large numbers of employees and cutting operations. Without this legislation, most airlines will be forced to file for bankruptcy by the end of the year.

Even more unfortunate, this slowdown affects not only the airline carriers but the airports, the vendors, cab drivers, rental-car companies, manufacturing and many other businesses. Today's hearing will set how Congress can assist. There are many questions, and I'm looking for how we can assist in making sure that what happened on September 11th never happens again.

Thank you, Mr. Chairman.

REP. YOUNG: I thank the lady for the shortness of her statement, too. At this time Mr. LaTourette.

REP. STEVEN LATOURETTE (R-OH): Thank you, Mr. Chairman. Mr. Chairman, last Friday I was heartened, when we left the Republican conference, to know that you intended to bring forward a piece of legislation that would have addressed the ailing nation's airlines and send a message when they opened on Monday, the markets, things were going to be okay; help was on its way. I was also gratified but not surprised that the distinguished ranking member of this committee was fully behind the effort.

I have to tell you, I was stunned and I was saddened when that measure was blocked by the failure to receive unanimous consent. And instead of sending a message that the House was ready to help and the Senate would be back this week to help consider it as well, we sent nothing.

The airline industry and anxious investors heard the silence of the House loud and clear. Continental Airlines, which has a hub in the great city of Cleveland, Ohio, announced layoffs of 12,000 people in the face of this inactivity by the House. It's lost $30 million a day. And the value of its stock dropped $20 on Monday alone.

Our major airlines have slashed flight schedules and employment rolls and still teeter on the brink of bankruptcy. Those who blocked this legislation are shortsighted. It's not just the airlines, and it's jobs on the line. There are thousands who build, supply, service and support the industry that are suffering, from Boeing, GE, Pratt & Whitney, to the small machine shops, the repair stations, and even the King Nut Company in Solon, Ohio, that puts the peanuts in the bags that you get when you get on the plane.

Jobs are in jeopardy. And it's not, Mr. Chairman, because of bad business decisions. The government ordered the planes out of the sky last Tuesday. And failure to act on our part will take our domestic airline industry to its collective knees.

Thank you.

REP. YOUNG: I thank the gentleman. Mr. Filner.

REP. BOB FILNER (D-CA): Thank you. And I thank Mr. Young and Mr. Oberstar for their leadership in making sure that we do get the airline industry back on its feet. My city of San Diego, of course, relies on this as much as anybody, and we need to pass legislation and we will pass legislation.

I think we ought to heed Mr. DeFazio's call for a shared burden here. And I want to add a couple of comments to his which I subscribe to. We have to make sure, as we go through with legislation, to keep in mind the needs of the industry's working people and the passengers. After all, they're the two most important cogs in the machine that keeps the airline industry moving.

We must have some assurance of job security. And I hope that when these negotiations take place, we don't have just Mr. Hoffa sitting symbolically at the table with the industry, but we have at the real table Mr. Hall and Mr. Roche (sp) and Mr. Witkin (sp) and the other leaders of the labor movement there to make sure that we do assure the working people their jobs, and if necessary pass some sort of disaster adjustment assistance for airline workers, which would include taking into account their health benefits and other benefits. There is legislation that we passed with regard to NAFTA that we could extend, but there are other approaches that any final package ought to make sure that we are looking to these protections for our airline workers.

And I think, while we are doing this, the passengers have certain needs beyond security. Security is the first concern. But we have tried, many of us, to get a passengers' bill of rights passed in this House. The airlines resisted it. You now are coming (for us?) for a need for bailout.

Well, I think we need to give our passengers, now more than ever, the assurance of information and compensation if things are not done in the right way. And I hope, Mr. Chairman and Mr. Ranking Member, that we incorporate some sort of legislation such as incorporated in H.R. 1734, a bipartisan airline passenger bill of rights.

REP. YOUNG: The gentleman's time has expired.

REP. FILNER: So let's go forward with this legislation and let's make sure that we meet the needs of the working people and our passengers as we do this.

REP. YOUNG: I thank the gentleman. I believe Ms. Kelly -- we're going on seniority, my friends, because there was some people switched around here. And I've watched this very carefully. You're not going to get ahead of the bus unless you have it coming. Ms. Kelly.

REP. SUE KELLY (R-NY): Thank you, Mr. Chairman. We've all been shaken by last week's events. Those of us in the New York City area have obviously been particularly hard hit. We are coming to terms with our loss. We are still grieving and still working to console our friends -- still worrying about how to care for our new orphans and those whose lives have been totally devastated by this terrorist act.

But New Yorkers are strong. Even in these days filled with sadness, we know that the work of America must continue, that we must do what is necessary to keep critical businesses and transportation systems viable during difficult times. Our first priority ought to be providing assistance for emergency efforts in New York, Virginia and Pennsylvania. The emergency appropriations package as passed last week was a great achievement, but it's only a down payment on the amount that will be needed to restore New York City and the Pentagon.

The potential collapse of the airline industry puts our economy, and indeed our national security, at risk. The airlines are vital component of our national transportation infrastructure, and every aspect of the national economy is going to be impacted by this terrorist act. Jobs will be lost, and average Americans will be the hardest hit. Stewart International Airport in my district has already felt the impact of the events of last week. Carriers are eliminating flights, with more cuts expected. New York ought not to have to absorb yet another blow to its economic viability. Such cuts will do that. America cannot afford the loss of thousands -- hundreds of thousands of jobs, as is being predicted.

Though I do not want to give the airline industry a blank check, it is clear federal assistance may be required. While the dollar amounts are high, the cost to America and American workers will be incalculable if we don't take action.

I look forward to the testimony of today's witnesses. Thank you very much, Mr. Chairman.

REP. YOUNG: Thank you, Ms. Kelly.

Ms. Johnson.

REP. EDDIE BERNICE JOHNSON (D-TX): Thank you, Mr. Chairman, and thanks to your leadership and Mr. Oberstar's for having this hearing so quickly.

I represent an area that has as its airport the economic engine, and so clearly I am very concerned about the airlines succeeding, as well as all of the workers that go into making this whole airline industry successful. They include the workers at the airport as well as all of the support systems. This will affect immediately about 50,000 people at our airports; but it affects close to probably a million people directly because of the meaningfulness of the Dallas- Fort Worth Airport.

I've gotten -- my office has been inundated by calls from American Airline employees, as well as persons who own concessions within the airport. It spans the whole gamut. I do think it's an emergency. I do -- I stand ready to assist the airlines.

I am concerned how we are going to address all of the job loss. In addition to aiding the airlines, I want to know what's in the picture to assist those other families that will lose their income as well. Thank you, and I'll submit my full statement.

REP. YOUNG: I thank the gentle lady. And I know I shouldn't say this, but I am the chairman -- I would suggest one thing, in all due respects, if we can try to speed this up a little bit. We have just about an hour now. We have a panel sitting, and we have a lot of questions to ask. So at this time I recognize Mr. Simpson.

REP. MIKE SIMPSON (R-ID): Mr. Chairman, thank you for observing the seniority system first. I appreciate that. And I will be very quick.

I want to just note that I am one who has some reservations about this package, because as others of us have said on this panel, there are more than just the airline industry that was affected by this. There are many, many, many businesses throughout this country, and I think we have to look at a complete package of how this has affected our economy in total. Besides that, I'd like to look at and see how this package, bailout if you will, how much of that is due to decisions that were made by management prior to September 11th and how much of it is due to the -- because of the acts of terrorism that occurred on September 11th. If we are bailing out bad decisions that were made prior to September 11th, then I have some concerns. So I want to look at the total package and see how this is going to affect us and our economy as a whole. I thank the chairman. I look forward to the testimony.

REP. YOUNG: I thank you for the short statement too.

Mrs. Millender-McDonald.

REP. JUANITA MILLENDER-MCDONALD (D-CA): Thank you, Mr. Chairman. And I would like to thank you and the ranking member for convening this in such a swift and deliberate fashion.

I would like to also thank you for bringing Mr. Hoffa to the table, because hopefully this is the beginning of this industry working with the labor industry, because we have now joined in partnerships -- and I think it's only fitting that we see this type of partnership at the table.

I will not continue in that I do have a statement for the record. But I will simply say that as we listen to your testimony I hope that we hear air security, airport security. I have talked with all of the airport folks in my -- in California, throughout California, and that is one critical issue, airport security, so that we can restore the confidence of those who are the traveling public, along with members of Congress who travel each week back and forth.

I am also concerned about job security. As we look at ofttimes the skycaps, those travel agencies and others. And bear in mind that as chair of the Women's Caucus, 82 percent of travel agencies are headed by women. I do hope all of this represents this particular financial package that we are speaking to. Thank you, Mr. Chairman.

REP. YOUNG: I thank the good lady.

Mr. Isakson, I believe you are next.

REP. JOHNNY ISAKSON (R-GA): Thank you, Mr. Chairman. In the interest of time I will submit my statement for the record, but make one comment for all of us on the committee. As much as I and everyone are concerned with many of the ancillary issues and industries that have been discussed, our concerns for them will be magnified greatly if we fail to immediately deal with the problem before us, which is the financial stability of the industry.

And, secondly, shared responsibility is critical. But we should not look totally to New York or Lockheed or Chrysler to be a model for that, because in part those difficulties were self-imposed or economically imposed and business-decision imposed. The crisis we face now was imposed by causes almost totally out of control of the industry and anybody else in this room, and I think we need to keep that in our consideration as we address the issue before us. And I will yield back the balance of my time.

REP. YOUNG: I do thank you.

Mr. Cummings.

REP. ELIJAH CUMMINGS (D-MD): Thank you very much, Mr. Chairman. I will be very brief. I want to thank you for calling this hearing. And certainly all of us mourn the deaths and all that has happened as a result of September 11th.

Mr. Chairman, I might add that I am 100 percent for this package. I realize that we must not let the terrorists succeed. What they want is fear, and for us not to continue, for us not to be the country that we are. And I think that if we don't lift up the airline industry we play right into their hands.

On the other hand, my colleagues have made it very clear that we want something from the industry too. We want employee guarantees. On my way down here from Baltimore I listened to C-Span radio, and out of about 25 callers I'd say 23 of them said, We don't mind helping the airline industry, but those executives making all that money -- what about the little guy? We want to make sure the little guy gets their break and their opportunities, and are able to take care of their families.

The other thing that certainly we are concerned about is airport safety. And while the people at Baltimore-Washington International Airport tell me they have never seen as many congressmen and women come into our airport, we are anxious to see National Airport reopen. I think it's very, very important that we do that, consistent with not letting the terrorists getting away with what they are hoping for, and that is placing fear in our hearts. And so with that, Mr. Chairman, I look forward to the testimony of our witnesses.

REP. YOUNG: I thank the gentleman.

Mr. Hayes?

REP. ROBIN HAYES (R-NC): Thank you, Mr. Chairman. We have the obligation as Congress to support America's best interests. A strong viable airline industry is unquestionably in the best interests of America. That strength comes from this committee -- job security flows from that.

We must have the public return to its normal flying habits, and in conclusion America at work showing our resolve to meet the needs of our people and freedom-loving people around the world is the other crucial component. This is being done with courage, conviction and magnificent resolve. The American people are doing their part. We as members of Congress must show similar resolve and appropriate response. Thank you.

REP. YOUNG: I thank the good gentleman.

Max Sandlin.

REP. MAX SANDLIN (D-TX): Thank you, Mr. Chairman, for calling this meeting. Thanks to the ranking member and for the leadership of both of you. First, we sincerely thank invited witnesses for being with us today. Aviation is a critical part of our infrastructure and commerce and affects our entire economy. Congress cannot and will not allow terrorists to destroy our system.

We are reaching out to the industry. I think it's important that the industry work in partnership with us toward these common goals. The executives within the industry I think that are making millions of dollars in earnings, pointing fingers at Congress and saying that Congress is responsible for the layoffs is irresponsible. I hope that we can work together.

Even before last week's attacks there were problems within the industry. There were projected losses of $3 billion for the year, and I know that the losses as a result of this will be much higher. And we certainly want to work with you. We have short-term and long-term problems. We need to act immediately and decisively to make sure that our families are taken care of. We want to keep the planes flying, the workers paid and the public assured that flying is safe. And that's why we are here today, and I am sure that we will accomplish that goal.

Long term I would like to follow the lead of the president of the United States and say that we need to be patient, we need to be focused, we need to get all the facts, and we need to do some long- term planning. And we can do some long-term planning to bring stability to the industry. And I would support the president in his approach in making sure that we do that. And I know that you'll have questions. We need to include the lenders to make sure we have new capital. We are not addressing problems from the past. We want to make sure that employees are rehired, that people feel safe. And I think working together we can do that, and we pledge as a Congress to do that. And thank you, Mr. Chairman. I yield back the balance of my time.

REP. YOUNG: I thank you, Mr. Sandlin. And, Mr. Sandlin, may I personal apologize to you for my shortness of temper. You and I are of the same ilk.

REP. SANDLIN: I will take that as a compliment, Mr. Chairman.

REP. YOUNG: Thank you, thank you -- appreciate that. (Laughter.) We had a difference of opinion, and I publicly will apologize.

REP. SANDLIN: That's no problem -- me too, Mr. Chairman. I appreciate it, and we're working toward the same --

REP. YOUNG: Mr. Simmons.

REP. ROB SIMMONS (R-CT): Thank you, Mr. Chairman.

Three points. My nephew is a flight attendant with the airlines, flying in and out of New York City, so my heart and prayers go to all of those who work in the industry. It's been a difficult week.

Secondly, I've flown three times in the last five days. The flights were safe, secure and on time, and I think it's important that as members of Congress and as public officials we get back in the air. I think that's a personal testament that we have to make.

Finally, I represent Connecticut. Connecticut is the insurance capital of the world. I know there are some issues involving insurance and the airlines. It would be my hope that through this testimony and through the work of this committee that we will not point fingers but make sure that the insurance industry and the airline industries work together so that we can keep these industries vital and get America back into the air. Thank you, Mr. Chairman.

REP. YOUNG: I thank the gentleman. Again, some of the witnesses have to be at other places in the congressional body to also testify, and I'd deeply appreciate it if we could expedite this process as fast as possible. Ms. Tauscher, you're up next.

REP. ELLEN TAUSCHER (D-CA): Thank you, Mr. Chairman. Gentlemen, thank you for being here. I think it's very clear that our economic security and national security have been inextricably intertwined for quite a long time as we lived in peace and prosperity prior to September 11th.

I am for a bunch of things. I am for the $5 billion cash infusion to get you back to September 10th, which is a place where many of us can never go again. I am for working on the liability issues so that you can have access to the capital markets.

My concerns in the short term about the loan guarantees are that I believe that we should not be in the government bail-out business, and we should not be doing things that will create another board, where we are in your knickers and reading your books. And, frankly, we don't have time for that. I would much prefer that we let the capital markets take the lead and at least have some commitment from the capital markets for these loan guarantees up to maybe 20 percent, and then the government could step in. That way we'd have a litmus test for viability for you, and a security test for the money that we are going to be putting in for the American people. I hope to look forward to working with you. And thank you, Mr. Chairman.

REP. YOUNG: I thank the good lady. Friends on my side, do we have to talk? Mr. Brown, if you want to talk, you can, but I'd deeply appreciate -- you'd get a lot more brownie points if you'd -- (laughter) --

MR. : (Off mike.)

REP. YOUNG: I apologize for that.

REP. HENRY BROWN: (R-SC) If I might make one statement that I don't think has been covered here today -- I know I left home this morning -- I woke up this morning at 3 o'clock to catch a six o'clock flight out of Charleston to come here today. And on this plane was 10 people that a capacity of 50. And Mr. Chairman, I would just hope that in remarks today we would have some kind of a management plan to try to bring back to the people to fly again. I think this would help our problem. I certainly applaud you for the financial support, and I'm certainly supportive of that effort. But I certainly would like to see a management plan that would -- would bring the people back to the airways.

REP. YOUNG: I do appreciate that. Mr. Kennedy.

REP. MARK KENNEDY (R-MN): I would just like to thank you, Chairman, and Ranking Member, for having these, to welcome our fellow Minnesotan, Richard Anderson, and say that we need to make sure that our airlines stay strong. It's vital for our economy. It's vital for our small businesses.

REP. YOUNG: All right. Thank you. Mr. Rehberg.

REP. DENNIS REHBERG (R-MT): Thank you, Mr. Chairman. Real quickly -- I haven't heard anybody mention this -- we're talking about short-term and long-term solutions. I wholeheartedly support you on the short-term solutions. On the long-term solution, I want to hear something from the CEOs, specifically to service guarantees, especially for rural states such as, Mr. Chairman, you in Alaska and me in Montana, because we're already starting to see cancellations over and above what is normal, I believe. And so, when it comes to guarantees, let's took a look at the rural states as well.

REP. YOUNG: I thank the gentleman. Mr. Pascrell, and I do apologize -- I jumped.

REP. PASCRELL: That's okay, Mr. Chairman. Three points -- three quick points, if I may. Number one, any time unions and CEO at the same table without negotiating contracts is a good sign for America that a lot of good is going to come out of this horrible tragedy. And I congratulate all of you, and our chairman and ranking member.

Number two, we could go back over what the airlines did or didn't do over the last five or six years to secure passengers and product. I think that's really counterproductive right now. I want to come to our senses and do something by the time we leave -- whenever we leave this week.

And three, Mr. Chairman, yesterday -- I know the resolve of Americans, no problem is to big for us. I was at Fresh Kills yesterday, put a mask on, and saw the resolve of all of those volunteers going through debris, going through everything -- and we know what they were looking for. No problem is too large for us. We can address it. And we can do it smartly, and quickly, and deal with the minutia later on.

So, God bless you. And let's solve this problem today.

REP. YOUNG: I thank the gentleman. Mr. Boswell.

REP. LEONARD BOSWELL (D-IA): Thank you, Mr. Chairman. I'll try to give part of my time back. I appreciate you calling this meeting. And you've assembled a very knowledgeable group of witnesses. We have CEOs, CFOs -- we have the general officers, if you will, we have the generals. Mr. Hoffa, you're at the table, we've got the troops. And I've never seen any -- any operation take the hill without having the troops as well, so congratulations for having the troops here as well. I appreciate that very much.

Today, we're confronted with the very future of our aviation system. Commercial, general aviation, aircraft manufacturing -- many thousands of Americans employed with the industry. We've said it, and business of all kinds depend on moving with this type of mobility. Now, I don't want us to see a newspaper ad some years hence that says we failed to act. If we do not move quick to approve a financial assistance measure -- and I mean this week -- we'll lose either all or certainly a significant part of our aviation system, and this includes general aviation. We still have VFR ground. I have an airplane. I fly it frequently. I can fly an IFR. I do. I can fly short legs, VFR. As soon as I get close to a terminal, I contact them, of course, as we are required to do. But I could have done that this weekend. I could have flown to Des Moines or Kansas City. So, why are we penalized in these operations of fixed-based operators when it accomplishes nothing?

So, anyway, let us here this testimony today that will document the perilous condition of our section of aviation, and approve this assistance by the end of the week. We simply can't wait. I'm drafting legislation for security. Others are too. I applaud that. Together, we'll have something good, which will federalize all security operations in our national airports. And after dealing with the financial aspects of this crisis, we must promptly turn to dealing with the security aspect. This morning, just before I walked in this room, the police department in Des Moines, Iowa called me and said "We're ready to be trained a extra couple of hours, whatever it takes, we're already trained to assist in our free time to be sky marshals or whatever we can do to help the airlines, because we want the airlines to continue to function and we're ready to step forward." And I applaud them. I bet they're that way all across the country.

Last night, I boarded an airplane --

REP. YOUNG: The gentleman's time has expired.

REP. BOSWELL: -- I boarded an airplane to come back here. My message is, let's keep doing what we have to do, and tell Americans we're not going to let Bin Laden or anybody else of his ilk disrupt our American way of life. Thank you for being here.

REP. YOUNG: Does anybody else wish to be heard? Mr. Lampson. Just a little bit, guys. We're --

REP. NICK LAMPSON (D-TX): This will be -- I'll give you my statement, Mr. Chairman, but I do want to make at least a statement that on Monday and Tuesday of this week I talked with airline officials and employees that work at airports in my district, such as Houston's Bush Intercontinental and Southeast Texas Regional Airport in Beaumont and Port Arthur. While they were terribly saddened by the events, they worked -- are working with the FAA and other government officials to instill confidence in the flying public, which we all know is so critical.

A significant component of restoring this confidence will be addressing the issue of aviation security, which has already been said. Several of us will be attempting to be doing, including myself, including federalizing the baggage screening process and other airport security. This committee, I know, will expeditiously plan to get on to that.

We must address today the financial stability of our airline industry. There is no doubt in my mind that Congress and the White House must approve a relief package which includes any number of tools, including direct aid and loan guarantees. And I'm ready to get down to work to do it, Mr. Chairman.

REP. YOUNG: Thank you, sir. Mr. Baldacci.

REP. JOHN BALDACCI (D-ME): Thank you very much, Mr. Chairman. And I appreciate the opportunity -- sometimes democracy sometimes is not easy and opportunities to speak to the issues are important. And I think that the amount of money that we're dealing with here and the circumstances warrant a little bit more of a discussion, and I appreciate that opportunity. And I appreciate the opportunity that our subcommittee is going to have on this issue.

These attacks not only claimed the five thousand innocent lives, but they also dealt a blow to the U.S. economy. These tragic events also demonstrated the importance of the aviation industry to the proper functioning of the U.S. economy. Many companies across Maine and the nation rely on the major airlines to ship their products to domestic and international markets. In addition, some businesses -- even hospitals -- rely on just in time delivery to keep their shelves stocked with critical components and emergency medical devices. Accordingly, many businesses in Maine were negatively affected, as they were across the country, with this disruption in service.

We all recognize the financial damage the airlines are experiencing at the moment, and I commend the chairman and ranking member for scheduling this hearing. The U.S. economy would not be well-served by rising airline tickets and a string of airline bankruptcy. I'm eager to work, and work with this committee.

And also, Mr. Chairman, I'd like to point out that what good did come from all of this is the outpouring of pride, courage, unity and goodwill across America that demonstrates the strength of the American spirit.

And, Mr. Chairman, I'll put the rest of my remarks in the record. And thank you.

REP. YOUNG: I appreciate that. And at this time -- again, I'm going to use the chairman's prerogative -- Mr. Hoffa is going to testify first. His testimony is short, and as he does have to go to another meeting immediately. And I apologize to the rest of the CEOs. Mr. Hoffa. And by the way, he's not symbolically sitting at this table. He asked to be at this table because he knows the importance of the workers of the American airlines and the contribution they may. So, Mr. Hoffa, you're up.

REP. : Mr. Chairman, I just wanted to announce to Mr. Nadler and Ms. Berkley are not able to attend today because of their commitment to the Jewish holidays.

REP. YOUNG: We believe that. Go ahead.

MR. JIM HOFFA: Thank you, Mr. Chairman and members of the committee. My name is Jim Hoffa, and I'm appearing on behalf of the 1.5 million members of the International Brotherhood of Teamsters. Thank you for inviting me to testify today on behalf of the 50,000 Teamsters who work for the airlines, and the more than 100,000 teamsters who work in the airline related industries, such as engine overhaul, food catering, car rental, and parking, all of which are adversely affected by the terrorist attack in New York and here in Washington.

The Teamsters union is deeply concerned about the impact of the recent shutdown on the airline industry. For an economic perspective, it is a disaster for the airlines as well as for the supporting vendors, and of course, most of all for our members. The attacks have fueled fear of flying that translates into reduced business travel, leisure travel, and the desertion of customers on the short segments and the long segments. As one congressman said today, ten people on the flight, eight people on the flight -- that's what I'm hearing about people coming into Washington today, and it's amazing that so few people are traveling because of the fear that has come over this economy.

This in turn affects supporting vendors, airport business and leisure markets, such as hotels and restaurants, in places like Las Vegas, Hawaii, Disney World, just to name a few. Even rental car companies, where we have most of the people, are affected in these areas. Unfortunately, many of these workers are hard hit and can least afford this displacement. The layoff of thousands of workers only undermines consumer confidence and accelerates the downward trend of our nation's overall economy.

Regional carriers such as Allegheny, Great Lakes, Horizon -- where we represent the pilots, and flight attendants, and ticket agents -- serve communities that are also on the long-haul and short- haul segments of this industry. In order to preserve service in these smaller communities, an immediate subsidy program should be initiated to both sustain such operations and help restore consumer confidence in our air transportation system.

Major passenger carriers have already begun reducing operations, and 20 percent across the board is heard commonly. That affects our members as much as anybody else. Aircraft are grounded for a lack of business, and may result in a cancellation of new aircraft orders, which will affect Boeing. Cargo carriers like UPS and Airborne, where our members work, have also suffered a financial setback from the grounding and should be included in any financial package. Job losses in the air transport industry can well exceed over 100,000 members.

These are not the results of -- that we need for our nation. The International Brotherhood of Teamsters, therefore, recommends the following actions affecting air transportation financial assistance.

One, provide protection against liquidity crisis through a combination of tax holidays, tax repeals, rebates, cash infusion and grants, loan guarantees, and other instruments on a proportional basis for air carriers demonstrating a need. Among these are major passenger carriers such as Continental, Northwest and Southwest, cargo carriers such as Airborne and UPS, regional carriers such as Allegheny, Horizon and Great Lakes, and supplemental carriers such as Air Transport International, Champion Air, and World Airways.

Two, provide subsidies for regional carriers on those routes made non-profitable by the consumer lack of confidence following the September 11th tragedy, particularly where these are preformed as essential air services.

Three, provide guarantees of hull (?) and liability insurance against disproportionate increases -- that's basically stop the increases in insurance. Support legislation for liability protection regarding damages to persons and property on the ground arising from the terrorist acts.

Five, provide anti-trust protections for airlines to discuss scheduling concerning national air space for up to six months.

Six, expand the air mobility command civil reserve air fleet program to support national defense needs.

And, seven, restrict foreign ownership of U.S. airlines at the current rate of 25 percent.

Transportation labor stands ready to support emergency aid to the airline industry. We do not feel, however, that our members alone should bear the burden of management decisions designed to overcome the hemorrhaging occurring in the air transport and associate industries as a result of this disaster. This committee should give strong consideration to including a financial relief component for displaced workers to any airline package. We have to make sure that the workers are the ones that haven't be hurt perhaps the most.

There has to be an equality of sacrifice in any program we come up with. Everybody should have to tighten their belts with regard to what we're going to be doing with regard to this crisis. That could take the form of longer-term unemployment benefits and job placement and job training for those who have been displaced. We should also consider that the workers have their health care considered when they're not -- when they don't have their jobs or drawing unemployment, to make sure they continue to have health care. After all, if we are helping the airlines survive, we should do no less for the employees that work for the airlines.

I urge the airline management to tighten their collective belts and to stand shoulder to shoulder with our thousands of members to reestablish our airline industry, and the most profitable one in the world. To that end, consideration should be given to curbing bonuses and other management perks until those companies return to profitability.

In addition to financial help, we must take other steps to restore confidence in airline travel, if the airline industry is ever to recover. That means beefing security and safety at the airports of America to prevent further terrorist attacks. In the interest of time, I have included several security recommendations, but I have put that in another cover, and I will not take up your time with that.

I want to thank you, Mr. Chairman, and other members of the committee, for the opportunity to testify here today, and especially to thank you for accommodating my schedule.

REP. YOUNG: I thank you, Mr. Hoffa. And at this time I want to announce that the first panel -- Mr. Mullin, I believe is going to speak -- Leo Mullin -- is going to speak for 15 minutes, approximately, is that correct, my understanding?

MR. MULLIN: Yes sir.

REP. YOUNG: And then the rest of the panel is available for answering questions. Is that correct?

MR. MULLIN: That is correct, sir.

REP. YOUNG: And Mr. Smith will make a short statement, too. So at this time, Mr. Mullins, you're up -- Mullin, excuse me.

MR. MULLIN: Mr. Chairman and members of the committee, thank you for providing the opportunity to testify here today on behalf of the Air Transport Association and its member airlines. I am joined here today with John Kelly, chairman, president and CEO of Alaska Airlines; Doug Parker, chairman, America West; Fred Smith, CEO, FedEx Corporation; Richard Anderson, CEO, Northwest Airlines; Tom Horton, chief financial officer of American Airlines. And I'm pleased to be on this platform with Mr. Hoffa also. Thank you.

We are extremely grateful to you, Chairman Young, and to you, Congressman Oberstar, for convening this hearing. We look forward to working closely with all of you in the important work of rebuilding from enormous tragedy and, just as importantly, the work of restoring our nation's confidence in the future.

On Tuesday morning, September 11th, the unthinkable happened and our lives were changed forever. The passing of a week has done little to lessen the shock and the grief of so many deaths and so much destruction. The airline industry offers our heartfelt sympathy to the families and friends around the world. We join them in mourning the victims, including passengers, crews and innocent bystanders on the ground.

On that horrendous day, as soon as we could move through the initial shock waves, the first priority for the U.S. aviation system was to bring all passengers and crews safely to the ground. Through exemplary cooperation between the airlines, airports and the air traffic control system, our 2,000 domestic airplanes landed safely at the nearest airports within two hours, and those were followed shortly thereafter by the safe landing of all international flights.

Once every person in every flight had been accounted for, the nation's airlines joined forces once more with our government to tackle the awesome task of rebuilding the aviation security system. By Wednesday evening, the foundation for a new system was established and the job of training airline personnel to implement these more rigorous security measures was underway.

By Thursday afternoon, a trickle of scheduled and ferry flights began to restore the flow of people and goods across our nation. By Saturday, major portions of the U.S. aviation system, which had been geographically scattered and stopped completely for the first time in history, was back up to as much as 70 percent of service.

This stunning recovery would not have been possible without the capable leadership and cooperative collaboration of so many here in Washington and the incredible employees who serve this industry. I believe today many Americans share our industry's sense of pride in having so ably proved once more that no catastrophe can bring our nation to a halt for long.

It is also true, however, that while the operational recovery of our air transportation system has been phenomenal, the financial damage is and continues to be devastating. The initial shutdown of operations, plus the severely reduced schedule of the next few days, has cost the U.S. airline industry dearly.

Passenger demand since restart has been weak, with many industry analysts predicting that reduced travel patterns are permanent, and with all agreeing that the total revenue hit in the coming weeks and months will be steep. Many insurance companies have notified airlines of astronomic premium increases. And in addition, the cost of heightened security measures, which we all agree are absolutely essential, will substantially increase the cost of doing business.

These financial blows are coming fast and furious to an industry that, even in good years, faces intensive capital demands and razor- thin profits and was already projecting losses for the year. Mr. Chairman and members of the committee, under current circumstances, and without immediate financial support from the government, the future of aviation will be severely threatened.

For many airlines, there are no private sources of capital available. Financial liquidity in the industry is poor. Already airlines have announced layoffs of 51,000 airline employees, and that number is expected to grow. And even with the self-help that airlines have already said will be taken, almost no airline is strong enough to survive for long facing the upcoming challenges.

Therefore, on behalf of the industry, I am here to ask your help in the development and approval of a package of transition aid so that, as Transportation Secretary Mineta said recently, we do not allow the enemy to win this war by restricting our freedom of mobility.

As airline operations began to return on Friday, the CEOs of the industry, under the aegis of the ATA, turned their attention to the looming crisis. Under the leadership of Chairman Young and with the assistance of members such as Congressman Oberstar and others, this committee had quickly realized the importance of swiftly addressing this deteriorating situation.

This committee introduced legislation to provide the industry with much-needed help. We deeply appreciate that effort. And the proposal we want to discuss today builds upon your legislative effort for the same purpose, which is to develop a recovery program that ensures the security, safety and stability of this critical industry.

Our program has three key components. The first addresses the necessary financial underpinning required to maintain our capacity to serve. The second relates to liability issues arising out of the tragic role cast on aviation in this brutal attack on America. And the third deals with the need to provide resources for the enhanced aviation security programs our nation is undertaking.

Let me outline first the very serious financial issues we face. Our first task, Mr. Chairman, in developing this piece of the proposal was to properly assess the magnitude of the financial impact to establish the financial need. In effect, we as an industry experienced roughly four days of near-zero revenue while, due to our largely fixed costs, we continued to accumulate all expenses. Since the airline industry spends around $340 million a day, the direct cost of a four-day halt in operations was approximately $1.36 billion.

Looking beyond those four days, we've used the actual numbers so far as well as projections, based on the Pan Am 103 and Gulf War tragedies, to estimate the revenue kind of shortfalls that we expect in the September 15 to September 30 period, and that will likely reach only 40 percent of what we had expected prior to the events of September 11th.

Based on that, our estimated daily losses for that period related directly to the September 11 event totals $3.36 billion. Adding together, then, the four-day losses from September 11th to 14th of $1.36 billion, plus the expected September 15 to 30 losses of $3.6 billion, brings the total losses to $4.7 billion for the ATA carriers. If we add $300 million or so for losses by cargo and other carriers to the $4.7 billion number, we arrive at a cash infusion amount of $5 billion which would be required by the airline industry to take care of immediate-term damage associated with September alone.

We then applied the system of analysis to the full fourth quarter based on estimates traffic would grow to 60 percent of previous expectations by the end of December, to 75 percent of expectations by the end of the first quarter of 2002, and 85 percent of expectations by the end of the second quarter. We then made forecasts of revenue expenses and cash flows associated with those revenue assumptions and determined their effect on cash balances.

This measure best reflects our need for funds to sustain and stabilize our industry. Prior to the events of September 11th, the industry had forecast an aggregate cash balance on June 30, 2002 of positive $8.5 billion. We have now revised that expectation to a negative $15.5 billion. Thus the events of September 11th are forecast to have a negative $24 billion impact on the industry's cash position.

Our financial teams also ran projections for optimistic and pessimistic scenarios. The swing in cash balances over the period ranged from an optimistic drop of just under $18 billion to a pessimistic $33 billion decline.

Now, none of us knows precisely what will happen in the upcoming period. These estimates pertain to a situation that has never occurred before. We therefore feel it would be appropriate to presume a set of numbers that could happen but that would minimize the amount of government help needed, and thus we are basing our request on our optimistic numbers.

This implies some risk, but it is our job to do the very best to absorb that risk as part of our collaboration with the government. Hence we would recommend that the industry and government use the optimistic projection of just under $18 billion, minimizing the industry's request for financial aid relating to this tragedy.

As mentioned earlier, we had recommended an immediate $5 billion cash allocation to address the immediate and devastating impact of September on the industry. As in the second part of the financial portion of this package, we asked the government to also provide us with access to $12.5 billion in loan guarantees. This request totals then to a request for $17.5 billion in financial assistance.

We hope, with these resources in place, the industry will rapidly reach the point where we can return to the private financial markets to borrow, as we have in the past. Mr. Chairman, our need is urgent and immediate. I would also like to emphasize that the industry is not asking the government to simply trust us on these arrangements. We fully expect, under the administration of the DOT, that we will fully document each and every claim received for both the cash infusion and the credit facility.

We are also suggesting that the formula for determining the availability of these programs to individual companies be allocated proportionately on the basis of their size. This calculation, done under DOT supervision, would allocate funds in the case of combination and passenger carriers based on available seat miles, ASMs, or, in the case of cargo airlines, on revenue ton miles, RTMs.

Mr. Chairman, we understand that these are large numbers, but we must also emphasize we face an enormous problem with potentially devastating repercussions for our nation's full recovery.

The second topic I must discuss pertains to the liability issues arising out of the tragic role cast on aviation in this attack on America. The events of September 11th are unique, with terrorists, for the first time in history, using a commercial aircraft as an instrument of destruction.

We believe, however, that the resolution of claims arising from the act of war should be resolved by Congress enacting appropriate federal laws rather than by resorting to the widely divergent principles of state common law. If that is not the case, then while American, United and other airlines named as defendants will necessarily defend themselves in litigation, the massive response time and uncertainty as to the outcome of litigation will almost certainly frustrate airlines' ability to raise needed capital in the short term.

In addition, it may well prevent airlines from purchasing necessary insurance until such time as the litigation is concluded. And what's more, some carriers are reporting drastic increases in premiums, and other carriers fear that insurance may not be available at any price.

Should access to capital markets be curtailed over concerns about liabilities in excess of financial resources, some carriers would not likely have any assets in excess of their insurance to respond if liability for persons and property on the ground were ultimately found. Therefore, we would propose that the second part of our program, that legislation be passed by Congress preserving any existing rights of proper parties to bring claims against the airlines for the experience and deaths of the airline passengers, as is done now.

However, such legislation should also stipulate, based on the fact that this was an act of war, that the airlines would not be liable for the damage to persons and property on the ground. This seems the fairest way to ensure that the proper parties have the right to pursue their legal rights, while airlines are not further victimized by these terrorists and can instead continue the work of rebuilding our nation's aviation system.

Mr. Chairman, it is absolutely critical that this issue be addressed in your legislation, as it is a critical element of the overall financial impact of the tragedy on our industry. In the light of recent days, airlines are already confronting an unprecedented increase in premiums, war-risk insurance and possible reductions in coverage. These increases in premiums could approach $1 billion for the entire U.S. airline industry. We simply don't have the resources to pay for such increases, which are a prerequisite for airline operation.

Therefore, we propose that Congress expand the war-risk insurance program to include domestic operations, include in such an expanded program both (whole-loss?) and liability coverage, and employ the Civil Reserves Aircraft Fleet, CRAF program, wherever possible to assist in providing airlines with insurance coverage.

The third and final component of our program deals with the need to provide resources for the enhanced aviation security program which our nation has undertaken. While these measures are the appropriate, immediate first step, it is a strongly-held belief in the airline industry that the events of September 11 marked a sea change in the way we as a nation need to think about security.

It's time for a unified federal security system calling forth the government's extensive resources and expertise, including intelligence-gathering capability and relationships with foreign governments. Clearly our industry stands solidly in support of the jointly-developed security measures recently adopted by the airlines. And just as clearly, enhancing the safety and security of the nation's air transportation system will significantly increase both the direct and indirect cost of air transportation through increased staffing, additional equipment, and changes to physical infrastructure.

Our proposal, Mr. Chairman, is that the government should, one, provide financial support for all mandated safety requirements, including reinforcement of cockpit doors and enhancement of screening devices, strengthen intelligence-gathering analysis and distribution processes, take over all security screening functions, and provide sky marshals on domestic flights.

The government's assumption of a stronger role in aviation security by assuming these responsibilities will be an important step that will go far in addressing the issues at the heart of public concern over the events of September 11th.

In closing, Mr. Chairman and members of this committee, our proposal is only intended to stabilize the financial condition of this industry. It is not a bailout but rather a package designed solely to recover the damages associated with the heinous acts of September 11th, and it gives the airlines a chance to continue to serve as the economic engine and offer the public service it is our duty to provide.

The current industry situation is urgent. While the financial components of this recommendation are most directly related to airline viability, the issues of liability and security are also important factors in our industry's crisis. Because of variations in financing cycles and other differences between carriers, several airlines are facing decisions in just the next few days that will dramatically influence their future course, and indeed public perception of the industry.

Under ordinary circumstances, in ordinary times, Congress should not and would not make decisions of this magnitude without lengthy debate. These are not ordinary times nor ordinary circumstances, and as a result, the airline industry is requesting that you move decisively now.

Thank you. And our panel colleagues will be glad to answer any questions.

REP. MICA: Thank you, Mr. Mullin. Also thank you for summarizing on behalf of the other airline representatives that are with you. We're not going to get to questions just yet. Let me give Mr. Fred Smith an opportunity to testify. He's chairman and president and CEO of FedEx Corporation. Mr. Smith, you're recognized.

MR. SMITH: Mr. Chairman, I'll be brief. The issues that confront --

REP. MICA: I don't think your mike is on, Mr. Smith.

MR. SMITH: Am I loud now? Okay. Thank you, Mr. Chairman.

I appreciate representing the interests of the all cargo air carriers that are members of the ATA. Our all cargo carriers transport about 95 percent of all cargo moved by U.S. carriers. It's a very, very important industry, and should be of concern to the Congress for two very important reasons.

First, both domestically and internationally, the air cargo industry carries the vast majority of the country's high value-added and high-tech goods. Air transportation now moves over 40 percent of the value of all U.S. imports and exports, and if you take out the value of agriculture and petroleum products, which move by sea, it's well over 50 percent of all U.S. trade now moved in air transportation.

The second reason that it should be of interest to the cargo is that our industry is an indispensable part of the national defense of the United States. FedEx alone, which I am pleased to represent our two-hundred-and-some-odd-thousand employees, has committed to the civil reserve air fleet over 100 wide body freighter aircraft. In the Desert Shield and Desert Storm operations ten years ago, civil reserve air fleet carriers moved over half of all the air cargo moved into the operation and FedEx alone moved over 60 percent of that. So, we moved almost 30 percent of the cargo in the -- in support of the U.S. operations in Desert Shield and Desert Storm.

Our issues going forward are far less significant than the passenger carriers because obviously there is no issue of people being afraid to fly on all cargo air transportation companies. But there are three issues which are extremely important.

The first is the significant losses incurred by the air cargo industry as a result of the government shutdown due to the September 11th situation. In the proposal that the Air Transport Association has made, I would point out to you that the vast majority, I think about 90 percent of all the funds recommended go to a combination of passenger carriers, based on the formula. But those losses were significant, and they're not inconsequential, and they certainly are not important, given the huge, important role that the all cargo industry plays in the national defense.

I'd say parenthetically I was a little disturbed today to see in the left-hand column of the Wall Street Journal an article about the U.S. military transformation, and they noted that a recent war game at the Pentagon took place with the supposition that terrorists attacked my headquarters, due to our importance to the national defense.

So, the second area that we're concerned about, obviously, are the security issues that come out of this crisis. Our airplanes are perfectly capable of being used as a military missile the same way the passenger carriers' equipment is capable of being used, although the risk is less because we have better control to the access of that equipment, and have increased that substantially.

And the third issue that affects us, and this is very, very important, we are all in the same insurance pool -- whether you carry passengers or cargo. And both the availability and the cost of aviation insurance, particularly as it applies to third-party incidents -- God forbid an all cargo airplane being used as a military missile as well -- will create very, very serious issues for our industry, and so that needs to be addressed as part of the overall package.

That, Mr. Chairman, I think sums up our position in the all cargo sector of the industry. And I am happy to answer any questions as they come down the pike.

REP. YOUNG: I thank you, Mr. Smith. And may I remind the members, if possible, because if you make your questions very short and very concise, and if the panel could make their questions short and concise, it would be very helpful. If a five-minute question or a five-minute answer -- because I am going to use the five-minute rule -- so that if you want to ask more questions -- and I will use my -- my first question myself.

The cargo industry -- you just talked about it, Mr. Smith -- you believe that they're faced with the same problems as the passenger industry?

MR. SMITH: No sir, not at all. I think the -- the cargo industry's issues are the significant losses incurred as a result of the 9/11 incident and the subsequent shutdown. The go-forward issues are significantly less in the all cargo sector than in the passenger sector.

REP. YOUNG: And along those lines, will the reduction in airline belly cargo capacity -- how will it affect, or will it benefit the cargo carriers?

MR. SMITH: Well, in the very short run, Mr. Chairman, there's probably some short-term pick-up. Our expectation is that very shortly, that cargo transported in passenger aircraft, at least from known shippers will resume, so I don't think that will be a factor.

REP. YOUNG: But I -- that's very important to me, because I believe that's one of the crucial parts to the commerce -- without your ability to carry cargo in those bellies -- and by the way, that was not the problem on the 11th -- it really hits into the economy of your area, and I don't think there's the capacity for FedEx, or UPS, or Evergreen --

MR. SMITH: No, not at all. It's -- and it -- I think the risk there is manageable provided that the cargo tendered to the combination carriers and put on passenger airplanes comes from known shippers with good security programs themselves.

REP. YOUNG: And this is for the rest of the panel: the question is -- and it's been brought up by other members -- proposed cash- infusing grants or loans to be distributed among the airlines, how would it be distributed amongst the airlines? Would they be provided the airlines proportionally according to each airline's available seats, miles in August of 2001? And those are the things that we have to get into this package. How is this going to be handled, in your -- in your points of view? I know you've been negotiating with the administration and everybody else right now. How do you visualize it? Whoever would like to address that, I'd gladly --

MR. MULLIN: I'll take that.

REP. MICA: Go ahead.

MR. MULLIN: First -- I'll speak to that first, Mr. Chairman. We have a unanimous recommendation, really, by the representatives from the Air Transport Association, that that mechanism is based on available seat miles to be used, is the fairest way. It proportionately distributes it by airline size. So, in Delta's instance, representing about 17 percent or so of the domestic traffic, we would get roughly 17 percent or so of the money. And each airline's percentage would be calculated accordingly, audited by the DOT. We think it is a fair method.

REP. YOUNG: How does it -- how does it affect the low-cost verses the high-cost airlines, and the regionals verses the majors?

MR. MULLIN: Richard, do you want to --

MR. ANDERSON: Yes, Mr. Chairman. The money would be allocated on the basis of capacity. And in the course of our conversations with the administration, we've had involvement from the associations representing each of those segments of our industry, and I believe in every instance Mr. Faverman (sp) and others have supported an allocation based upon the capacity that each carried had in the industry immediately prior to the terrible events on September 11.

REP. YOUNG: All right. Thank you, gentleman.

MR. ANDERSON (?): Mr. Chairman?

REP. YOUNG: Yes.

MR. ANDERSON (?): May I add to that also that, as Mr. Mullin said, this is simply a pool of money that we get and have to justify. So, every carrier would have to, at some point in time, justify why they received that allocation. So, that -- that makes it fair across the board.

REP. YOUNG: Okay. I -- Yes?

MR. SMITH: Mr. Chairman, I might point out here that the formula anticipated that 80 to 85 percent be based on the available seat mile production, which is filed with the DOT on a regular basis for the passenger operations. And for cargo operations, that 15 to 20 percent be based on the revenue ton mile production, whether in the under- bellies of the airplanes or on all cargo airplanes. So, the vast majority was for the passenger airline system as it existed. And those -- the reason that that formula was selected is because all of that information is filed on the form 41s with the DOT, and it's a pretty good surrogate, if you will, for the air transportation system that existed on September the 10th, the day before. And then I think it was further tested. It pretty well approximates what the known losses are of the various components as a result of 9/11. And finally, it makes no difference whether you're a big carrier or a small carrier. It's proportional based on your production.

REP. MICA: Thank you, Mr. Smith. I appreciate the answer. Remember what I said about short answers. My time is up. Mr. Oberstar.

REP. OBERSTAR: Thank you, Mr. Chairman. Excellent statement of the case, Mr. Mullin, and Mr. Smith, as we expect from both of you and have always -- you've always delivered.

Just to recapitulate, Mr. Mullin, you are limiting the first portion of the package, the $5 billion, to the four-day losses, 11-14, of 1.36 billion estimated, and expected September 15th through end of month losses of 3.36 billion. Is that correct?

MR. MULLIN: That is -- that is correct, sir.

REP. OBERSTAR: And the additional $12.5 billion that we understand is being crafted by the administration, would cover losses extending from end of September on through the coming year --

MR. MULLIN: Correct.

REP. OBERSTAR: -- of revenues that may -- that are not -- losses that are substantially high but losses that may decline as service picks up.

MR. MULLIN: That's correct.

REP. OBERSTAR: Do those estimates include reductions in cost as well?

MR. MULLIN: They do include some reductions in cost. And in addition to that, as mentioned, our best estimate was a need of $24 billion, which we -- we took the optimistic assumptions to reduce our estimate down to just under $18 billion. In order to hold that to -- to that $18 billion number, we are going to have to manage our costs extremely aggressively. So, that is our -- our commitment as an industry to work in collaboration with the government to essentially absorb the risk of find where that other roughly $6 billion or so is going to come from over that time period. And, so we do anticipate, unfortunately, that we are going to have to reduce our costs quite aggressively as we move ahead.

REP. OBERSTAR: Cargo is not in the same position. Cargo, however, was shut down, as all of aviation was, and the -- with the ground stop order of the secretary, is that correct?

MR. SMITH: Yes sir. The go-forward issues are not as extreme in the all cargo sector as they are in the passenger sector.

REP. OBERSTAR: Has the limitation on belly cargo and mail been lifted for passenger aircraft?

MR. SMITH (?): Yes, Mr. Congressman. On mail, the mail has to be certified by the postal facility at a given airport, and it must be under 16 ounces. With respect to cargo in the bellies of airplanes, we are restricted to known shippers. In the vast majority of cases at the airlines, that would cover about 95 percent. So, I believe our cargo decrement will be in the four to five percent range in terms of belly cargo.

REP. OBERSTAR: But there will be revenue losses to airlines from -- from the downsizing of cargo. Don't need to quantify it yet. Are lenders invoking their material adverse change clauses denying or limiting access to cash by airlines?

MR. MULLIN: Generally speaking, the lenders are expressing grave concern. We are in possession of a Morgan Stanley opinion here that was delivered to us this morning that indicated the total essentiality of having help from the government in order to supply any kind of private sector financing going forward. It's an essential element.

REP. OBERSTAR: Are your enhanced equipment trust certificates payments at risk by any carrier right now?

MR. MULLIN: Yes they are.

MR. SMITH: If I may, Mr. Chairman, it might be worthwhile to read a letter that was sent by Morgan Stanley to the Honorable Paul O'Neill, Secretary of the Treasury.

REP. OBERSTAR: Could you summarize it, because I don't have the time here? I have one more question I need to get in here. You can submit that for the record.

MR. SMITH: I will -- I will do so. Let me just read the last paragraph.

There will be no function in capital markets for the U.S. airline until the uncertainty with respect to both liquidity and liability are eliminated. Even then, access is likely to be severely limited until the path to a more normalized airline system becomes clear.

REP. OBERSTAR: That's very serious. Final question. In dealing with security, I have proposed in years past the assumption of security by a federal government entity, to be paid for by a security surcharge affixed to tickets, which is done in Germany and in France, and in other European continental countries, of two to three dollars. That would generate $1.7 billion to fund the security costs. Do you see any problem with that?

MR. : Well, we -- (audio break) -- of the citizens of this country from terrorism. Security has fundamentally changed from screening bags to literally, as you said, an intelligence community screening of passengers, besides which fact, one of the things that we're dealing with here is an industry that has a real problem with supply and demand from a passenger standpoint, and we can't add additional costs onto the ticket without, from an elasticity standpoint, a loss of passengers. So it really doesn't do us any good trying to pass along costs to -- in the form of increased prices to our customers.

REP. OBERSTAR: Well, I appreciate that concern. I just --

MR. : No, I understand.

REP. OBERSTAR: -- want to make the point that I know from past experience that people won't fly if they're afraid.

REP. YOUNG: I'm going to at this time recognize Mr. Boehlert on our side. Mr. Boehlert.

REP. BOEHLERT: Thank you, Mr. Chairman, because I see, Mr. Hoffa, you have to leave. My -- I have a two-point question to you. In this package presented to us by ATA, were you and other leaders of labor consulted and considered in its development? And part two of the question, how would you characterize the communications right now between labor and management? I'm operating under the theory that we're all in this together.

MR. HOFFA: We are in this together. We have not worked -- we've been advised of what they were doing with regard to this package. We have not had direct input. We look forward to discussing it with the industry. This has happened very quickly, and it was put together, I believe, over the weekend.

We would like to have more input into it, and, of course, we would like to discuss and get guarantees with regard to coverage and protection for the people that can least afford this dislocation, which are the workers at all of the related areas in the airline industry, the people who are making $20,000, $30,000, $40,000, $50,000, who are having a very difficult time and would suffer great dislocation.

And what I would like to do is to make sure that in this package there is some coverage to make sure we have extended unemployment benefits, that we have an extension of health coverage for people that are laid off, et cetera. We should try and build in different types of coverages so that this money doesn't go all one way.

We should also have something in there that puts some limitations with regard to how this money is spent, with regard to bonuses and things like that. I think that it's important that there be an equality of sacrifice with regard to this. I think that all of us expect that.

All of us know we have to tighten our belts. And I know our people are going to suffer. We're talking 2500 flight attendants at Northwest Airlines being laid off in the near-future, if not now. So there has to be some recognition of the sacrifice and that this be across the board, everybody who's involved in this. It's a crisis for all of us.

REP. BOEHLERT: Thank you very much. That's something I think most of us up here share. Mr. Mullin, the ATA -- and I think you guys, quite frankly, have done a magnificent job, and I, watching you individually as a spokesman for the industry talk to the American people side by side with Secretary Mineta, it gave me comfort.

MR. MULLIN: Thank you.

REP. BOEHLERT: But I would get added comfort if I felt confident that you were going to bring in the labor representatives for further consultation and partnership in this whole effort.

MR. MULLIN: You have our assurance of that. I appreciate Mr. Hoffa's observations on the swiftness with which we've acted, but we absolutely will include labor in that dialogue.

REP. BOEHLERT: Thank you very much. You mentioned and everybody has mentioned security, and that is so critically important. I have a question that, in view of the unfolding developments, tighter security is absolutely necessary. We're going to have more; all agree, absolutely necessary.

The fact of the matter is, if this plan that we approve -- and I think we will approve a comprehensive plan to assist the airlines to get up and running again -- but I question if we can ever look in the near term to 100 percent operational capability, simply because the system won't be able to handle it in view of the new, tighter security requirements. I mean, I was there Saturday morning for a flight. They were very thorough, but it delayed things. And I understand that, and everybody was very responsive and cooperative.

But what is your best guesstimate at this juncture -- and I know it's an early stage of the game -- what will be optimum? Are we going to get back to 85 percent of our capability, 75? Do you have any feel for it at this juncture?

MR. MULLIN: Well, I think you had a couple of questions there. One is on security and the other is on getting back to where we were in terms of just capacity or service prior to the terrible events.

REP. BOEHLERT: I guess my point is that even if we gave you everything you wanted --

MR. MULLIN: Yeah.

REP. BOEHLERT: -- and, you know, you're ready, willing and able to go back to 100 percent, you just couldn't.

MR. MULLIN: We couldn't.

REP. BOEHLERT: All right. So that's the basic question.

MR. MULLIN: Do you want to --

MR. KELLY: We, in fact, operate differently at Alaska Airlines than a lot of other carriers who have hub-and-spoke types of operations. They will have a much more difficult time, you're absolutely right, in accommodating all these security provisions and still having that network of hub and spokes operating properly.

But I truly believe that if we take all these measures, then it can get back to a new normal. And that would be the flight-deck door, sky marshals and enhanced security on the ground. All put together, I think that we can get people processed through the airport fast enough to get our operations back to, as I say, a near-normal.

REP. MICA: Thank you. The time of the gentleman has expired.

REP. BOEHLERT: Thank you very much.

REP. MICA: Let me recognize Mr. Borski.

REP. BORSKI: Thank you, Mr. Chairman. Mr. Mullin, let me also congratulate you on an excellent statement. I would like to ask, however, if we were to give you everything you wanted, what would the situation be as far as the employees of the airlines are concerned? Even if we gave you everything you needed, I assume, from your answer to a question from Mr. Oberstar, we'd still be looking at substantial layoffs. Is that right?

MR. MULLIN: That's correct.

REP. BORSKI: We're hearing a number about 100,000.

MR. MULLIN: I think it could amount to that much. What is happening, obviously we will fly airplanes in response to demand. And right now most of us have brought our flying up to about 80 percent of what it was prior to the September 11 situation. And I think most of us are sort of stopping to look around.

Obviously we're very much interested in flying more than that because we have tremendous fixed assets, primarily airplanes, that we want to fly. But if the demand isn't there, then it just won't make any sense to do it. And therefore, there would have to be some kind of proportional changes in the workforce that reflects the fact that we're only an 80 percent operation of what we were.

REP. BORSKI: You asked, in your statement, to stabilize the industry. And I think, again, there's broad bipartisan support for that. But we do need to understand that layoffs will happen even if you are given this --

MR. MULLIN: That's correct.

REP. BORSKI: And substantial. So are we talking about 100,000 even if you get this?

MR. MULLIN: I think, in terms of the ones that have been announced already, it's over 50,000. Several have not announced them yet, including my organization, Delta. I can assure you we are working assiduously on a plan, and the input of this committee and this Congress and the administration is a very important variable in terms of signaling to us what kind of financial help we can have going forward. That's a very important variable.

But with that financial help, I mean, there will still be substantial layoffs. And the number that has been used of 100,000, I think, gives a good kind of rule-of-thumb approximation, really regrettably.

MR. KELLY: If I may add to that, Congressman, our intent is to not lay off anyone. We truly do not want to do that, or if we have to get close to it, to be as creative as possible. But what we really need to have, in addition to the stabilization, is the ability to get passengers back flying with us. To do that, we have to look at the security initiatives. I know you're going to do that separately. They are needed.

MR. MULLIN: I would add, if I may, sir, just to give you one statistic from Delta, our load factor yesterday was 29 percent.

REP. BORSKI: Are these layoffs -- is this something that you would envision would be forever? Are we talking of a thinning of the employees of the airlines?

MR. MULLIN: Absolutely not. I think that when we cited in my testimony the assumptions that we made pertaining to the return of appropriate traffic, we went, as a best guess, into the second quarter of next year. And as you heard those numbers, you were getting back closer to an operation that might have approximated what we had had prior to the events of September the 11th.

So implicit in that, I think, is a guess on our part that it'll take at least a year to get back to those levels. But clearly when we do get back to those levels, we would anticipate, given the fact that we do think we run a good operation, that the employment levels would approximate what they are today.

MR. ANDERSON: And I might add that in most airlines, the employees that are laid off have certain recall rights. And our goal would be -- I mean, the hardest part of this, after watching what happened last Tuesday, is what you have to deal with with your people. And you would hope that over time, with this sustenance, we can get through this time period and begin ramping back up and have the opportunity to recall all those people.

REP. BORSKI: Okay. And Mr. Kelly, I wanted to address you particularly on the federalized airport security force that I think is universal from the airlines and probably has pretty strong support here as well. You indicate -- and I assume this is the position of the airlines -- that is a cost that should be borne by the federal government and not by --

MR. KELLY: Yes, sir.

REP. BORSKI: Why should the non-flying public pay for the flying public's security?

MR. KELLY: Well, I think it's like any other security or police force that's provided throughout the country, whether it's federal buildings or parks or any other time that the public has the chance, the opportunity to be affected by outside elements, in this case terrorists.

REP. BORSKI: So you think it should come from general revenues of the treasury of the government?

MR. KELLY: I mean, I think the tragedy of September 11th proved that we are not protecting the citizens just in the air, but on the ground and everywhere. And that's why this truly should be a federal program.

REP. MICA: The time of the gentleman has expired.

REP. BORSKI: Thank you, Mr. Chairman.

REP. MICA: Thank you. Let me recognize Mr. Petri.

REP. PETRI: Thank you, Mr. Chairman. As I indicated in my opening statement, I strongly favor our taking action to help stabilize the airline industry. But I think we need also to recognize that it's not the only industry that's been affected or the only group of Americans that's been affected by this terrible situation. We will be setting precedents. You're the first ones before us. We need to be careful that we handle this in a responsible way that leaves open so that others are treated fairly as well.

And we have, as a member of our committee, a person who spent years as an investment banker on Wall Street, Representative Tauscher, who has worked in a number of -- not quite as bad as this, but similar areas. I'd like to yield the balance of my time to her for questions.

REP. TAUSCHER: I thank my colleague. I did spend 14 years on Wall Street as a very small child, but I'm telling you that this is a daunting challenge. Mr. Mullin and gentlemen, I think that your presentation was very well put together, and I think that the issue of the $5 billion to deal with the ground stop, I think, at least in my mind, I think is settled. I think, as I said earlier, returning us as best we can to September 10th is going to be very difficult, but I think that's essentially what we have to attempt to do.

I'm concerned about a couple of issues. One is, have you had any conversations preliminarily with the Street about what you would do, assuming we can solve the liability issues, about going to the Street and actually getting some deal done for short-term liquidity? What will your burn rate be in the short term, now that you're going to have these massive layoffs?

And thirdly, I think that the spill factor, the bleed factor below your industry, is probably six to one. For every airline job, there's probably six other people that are going to be out of work. And I think that's a low number, and that's a short-term number.

Clearly, if we return you to some form of September 10th, we have a better opportunity of stopping that bleed factor. Can you answer those questions? And then maybe we'll have time for others.

MR. MULLIN: Well, I think we have a formal statement that has been placed in the record from Morgan Stanley indicating how essential it is that our government stand behind the aviation industry or none of us will be able to access private capital markets. I had one of the most difficult six hours of my business career on Monday. We had a $1.2 billion EETC equipment financing done on that day in the midst of this for which all kinds of guarantee had been supplied, and very fortunately we hung it together or I would be feeling an even greater act of desperation here as we speak with you here today.

I don't think that EETC financing, which has been the backbone of financing for the industry, can be done right now. I think that that Morgan Stanley statement indicates it. So certainly the government actions in the package of steps that you take dealing with all of the elements, that do include, very, very importantly, the liability issues -- I mean, none of us can have financing done if we have a contingent liability of the kind of huge nature that would arise out of a catastrophe such as happened on September 11th. These issues of the package have got to be drawn together in order to allow us to access private capital markets. It's a package.

MR. HORTON: If I could add to what Mr. Mullin has said, American Airlines was in the market with a $2 billion secured financing on the day of the incident. Obviously that financing hasn't come to pass. We've been talking with Morgan Stanley about what sort of financing we could do today. There is no secured financing market. If we were to do some sort of unsecured deal, their best guess is it would cost somewhere in the neighborhood of 15 to 20 percent today.

We have heard from all of the potential investors that this liability issue is first and foremost in their minds. Liability protection is probably the single most important thing that the government can do to help us get back in the capital markets and help ourselves. The capital markets correctly fear an avalanche of lawsuits which could bankrupt our companies. And until that cloud is lifted, I don't think we're going to have any access to the capital markets.

REP. TAUSCHER: I'm not looking for a letter of intent, but certainly I think we would all be looking for the Street to step up. I think we need an affirmative response from Wall Street. Assuming we can get this liability issue cleared in the short term, we need the Street to be able to step up. And additionally, as I said earlier, I believe that we shouldn't be putting American taxpayer dollars at risk unless the risk capital market is willing to step up on some of these loan guarantees.

I think that we're never going to be able to be crawling into your books fast enough to understand who the winners and losers are. We should not be putting our funds on the scale. Does this package going forward include, at your recommendation, or would you be for or against a board type of situation, or are you looking for less of a government intervention in the board type of situation?

MR. MULLIN: We would prefer to go forward with this, obviously with as little government intervention. I mean, this industry has been deregulated since 1978, and I think has extremely admirably served the American public. And I think we want to get back to full private-sector status. But as mentioned, we recognize that when one asks for government money, there comes a special responsibility to report to the government and be responsible for how we do handle those funds. So I can assure you we will want to get out of this situation as fast as possible and with as little call on the government as we possibly can.

REP. TAUSCHER: Could part of the deal be a Treasury/Wall Street deal to essentially do a deal, to do a capital infusion in not only loan guarantees but in a secure debt situation?

MR. MULLIN: I think we are very willing to consider all those kinds of options. But I would go back and make one fundamental point which I have conveyed to you, and you in part responded to it by your comment on the $5 billion. The need to deal with the situation is absolutely urgent.

I don't think I'm telling a tale out of school when I say that at least three of our members, of our major members of the ATA, are on the brink with respect to their financial situations. And we certainly don't want to have to utilize the jurisdiction of the courts, you know, to settle these situations, thereby creating a further lack of confidence in an industry with these kinds of problems. We have to have very, very fast action. And I appreciated Congressman Oberstar's earlier and Congressman Mica's comments that we will move swiftly on this. Swift is like Friday. I mean, that is the kind of timeframe that we need.

REP. MICA: The time of the gentleman has expired, and the time yielded to the gentle lady has expired. Let me please recognize Mr. De Fazio.

REP. DE FAZIO: I thank the chairman. Mr. Kelly, you know, you mentioned doing security separately. I, I guess, share your opinion there. I don't think we should it separately and I think it should be part of this package.

I am going to read you a statement here, and then I am going to ask you about something you said. This is my statement 16 March 2000 at a hearing on the inefficiencies of airport screening and the common practice of using lowest cost bidder for contractors. "I've got to tell you, when I am flying I doubt I could ever find one person on the plane who would say, quote, 'Gee, I would be really upset if I had to pay one half of one percent more for my ticket to know that the person who screened me was not convicted of various felonies and at high risk of allowing something to happen on this plane.'" I'm not saying that's what happened in this incident. But what I am saying is that everything has changed, but nothing has changed.

I have been hearing for years from this industry, if you charge $2.50 for PFC people won't fly -- they'll take alternate forms of transportation. You're telling me after this incident that a $3 surcharge is something that would trouble any flyer in your system. I don't believe that. I don't believe that. If your cost -- if your ticket for me is $300 or it's $303, and I know I'm contributing to the security -- you know, the government is the people. The government is the people, and the people are willing to pay a little bit more for their airplane ticket. They do it in Europe, and they have professional screeners, and they have better security. We may have to throw in general fund dollars over and above the two or three bucks. But, you know, we don't have a limitless supply of money. We're tapping into Social Security right now -- for the 40 billion last week -- we're going to be tapping into it for what you're asking for here today. And to ask that we get some support for federalization, that's great. But let's have the support with the modest security surcharge. And I would ask you if before you take that position again poll all your customers and see if a single one will respond to you in a non- anonymous fashion that they are unwilling to pay an extra two and a half or three dollars for their ticket

MR. KELLY: Please don't understand me -- or misunderstand me, Mr. Congressman. I believe that the security provisions should be part and parcel also. As Mr. Mullin said, there is a timeliness to what is needed from a cash standpoint, especially for some carriers. So that was my only reference to the differentiation. As to the --

REP. DE FAZIO: Right, but I asked -- you did raise the old saw of people -- you said directly to Mr. Oberstar that, you know, you did not support a surcharge. You said that. And that's what I am responding --

MR. KELLY: No, I --

REP. DE FAZIO: If I could go on to other questions, because my time is so limited.

MR. KELLY: May I respond to that though?

REP. DE FAZIO: Well, very quickly.

MR. KELLY: The people do not respond to anything other than the total price, and that is strictly supply and demand.

REP. DE FAZIO: Well, if you could -- I reclaim my time. We can put a line on their ticket that says $2.50 -- we have a lot of lines on the ticket already -- with really big letters -- "security surcharge" -- and I think the people would be happy to pay it.

MR. KELLY: I understand. But people still make decisions on whether to fly based on how much it costs to fly --

REP. DE FAZIO: Right.

MR. KELLY: -- just like they do everything else.

REP. DE FAZIO: So how many people turn down a ticket at $303 that they would have bought at 300?

MR. KELLY: You know, it really, sir --

REP. DE FAZIO: Okay, if I could reclaim my time, sir. We disagree --

MR. KELLY: -- is not that as much as the passenger --

REP. DE FAZIO: -- very, very much on this issue, and this is the same thing I've been hearing for 14 years -- 15 years, since I proposed my first bill on this issue.

Now, if we could move on, if we are asking for these funds, I'm very concerned about the workers here, and I'd like to know is there anything other than unemployment that is being considered by the airlines if this package is made available by Congress, if it doesn't include the workers specifically and some benefits to them? Is there anything that the airlines are thinking of beyond unemployment benefits, paying for health insurance under COBRA, or something along those lines? Is that correct?

MR. ANDERSON: Mr. Congressman, in most situations at most of the majors the provisions of collective bargaining agreements govern the layoff of employees in these circumstances. And in some cases they have recall rights, they have right to file for unemployment insurance, and in some cases -- I know at Northwest we are trying to offer unpaid leave for people to voluntarily take a leave from the airline without pay, so that others who are lower on the seniority list can keep their jobs.

I believe that the industry would be supportive of any other efforts on the part of this committee or the Congress to take any additional steps with respect to our employees. Like I said before, that's the hardest part.

REP. DE FAZIO: Okay, can I -- and I'd like to suggest one here. I know the airlines have pending plane orders -- some are options, some are hard orders. I would like to suggest that if we put U.S. taxpayers' dollars into the airlines that the first orders for planes canceled are for foreign-manufactured planes, and preference is given to the American-manufactured planes, because the Boeing workers and all the workers who supply Boeing are going to take a really big hit here, and we have got to look at buying American.

REP. MICA: The time of the gentleman has expired. Do you want someone to respond? Okay, let me recognize the former chairman of the Aviation Subcommittee, Mr. Duncan.

REP. DUNCAN: Well, thank you, Mr. Chairman, and I won't take my full five minutes, but I first want to commend you for the good work that you've done during this unprecedented situation. I think everyone knows that if we are able to come up with a good package it would pass through the House -- and I believe we can -- that we can do it repeatedly. And so I'll say that the key to recovery here I think is pretty clear: is to get people flying again. And Congressman Brown first mentioned this, that he had 10 passengers flying from Charleston. Mr. Mullin mentioned a 29 percent load factor for Delta. Mr. Hoffa mentioned eight passengers. I can tell you this: Knoxville, my home town, is not one of the largest cities, but it is one of the most rapidly growing areas in the country, and we have a very rapidly growing airport, now over two million passengers. I flew up this morning. There were five passengers on the plane. Now, those planes are almost always full. I have never seen a plane with just five passengers on it in all these -- this is my thirteenth year in the Congress.

And so I think that what we are going to have to do -- none of us in this room can do this alone, but we are all going to have to join together to help reassure the public that it is safe to fly. We have got to start getting the message out that we are doing more to make it safe to fly than probably any country in the world support with the possible exception of Israel. And it's probably safer to fly now than it ever has been. And yet that message is not getting out there. And I think all of you have got to get campaigns going with all of your employees -- telling everybody they possibly can, we all need to get that message out in our districts, because we have got to get people in the air again.

And I will say this: We have had all these briefings, and some of them have been pessimistic. But I -- and I don't have blinders on -- I know this is a very bad time and a very difficult situation, in many, many different ways. But I am hopeful, and I really believe that we've seen the worst of this situation. Now, I know the people who are responsible for the actions that took place in New York City and Washington last week, I believe they've been shocked by the world reaction of what they did. It's been condemned even by people in countries that I am sure they thought would praise them for it. So I think one -- even though we have heard some very pessimistic or very troubling things here in this hearing this morning, I think it's important to try as best we can to reassure the flying public that we are doing things on aviation safety and security that we have never done before. I am very pleased that we are doing things that I and Chairman Mica and Mr. Oberstar suggested right at the very first. And I think that -- you know, the people of this country are accustomed to flying, they're used to flying. They want to fly. I think that they will come back very, very quickly if we really make a concentrated effort to reassure them. At this point it's going to take a lot of -- it's not going to be an easy task. But I am optimistic that we can get back, as Mr. Kelly, to near normal, very, very quickly. It's extremely important. I just want to say that -- if any of you have any comments about that. I certainly hope you'll work with all of your employees to get them out there doing this. Mr. Mullin?

MR. MULLIN: I'd just say, Congressman Duncan, that how much we -- I am sure I speak for my colleagues on how deeply appreciative we have been of the sentiments expressed in that regard on the necessity for certainly all of us to market it well, but even your own roles, in being very public about it, I think it's just terrific. Thank you.

REP. DUNCAN: Thanks very much, Mr. Chairman.

REP. MICA: I thank the gentleman. Let me recognize Mr. Clement.

REP. CLEMENT: Thank you, Mr. Chairman. Good to have all of you here, and present your testimony. This is a very difficult time for all of us. Who would have believed this could have happened? But it did. I think all of us were concerned in then past that it could happen. But we always watched it on television -- it in other countries. And now it's in the United States. And I think the big question is: How fast are we going to bounce back? We want to be helpful to the airline or transportation sector, because I know you all have been hit harder at the present time, more than any other sector in our economy. And we surely don't want it to spill out or spill off into other areas, and obviously it is. I know I hear from my folks at home, even in general aviation -- and we all know that the VFR flights are not flying now. We know also that general aviation accounts for 80 percent of all takeoffs and landings in the United States. And we have got to give them some relief.

But I know people at home are going to ask us some questions. How much of this financial package should go to the major airlines, to our airlines in this country versus others? Because you have other sectors that are being impacted as well. And, Mr. Mullin, I'd like to ask you -- I know historically speaking, looking at the financial numbers, you always lay off people around September and October, and then you hire them back for Thanksgiving and Christmastime when things get a lot heavier. Shouldn't we take that into consideration about the size and the magnitude of the package?

MR. MULLIN: Well, we will be obviously trying to minimize to the maximum extent the layoffs. I've been at Delta four years, and we haven't had a layoff at all in this time period. So I am about to go through the unfortunate experience right now of having to deal with that effectively.

But I think what you've heard implicitly in all of our statements is that we are as eager as you could possibly be to get back to a more normalized situation. We just had to be candid with you and express the view that that is going to take us well into next year before that occurs. The damage is just going to be really huge in the short term. But we want to get back as fast as we possibly can. And all of these workers that we have that are unionized or nonunionzed are all highly trained, really great people. And we want them there when we need them. And so we will get them back as fast as we possibly can.

REP. CLEMENT: Mr. Smith, you're our largest employer in the state of Tennessee. Worldwide you have got over 200,000 employees. What assistance does Federal Express -- or I might say the cargo industry -- require separate from the passenger industry to maintain itself?

MR. SMITH: I don't think there are any separate issues, Mr. Clement, other than the ones I mentioned: the significant cost of 9/11; making sure the cargo security issues are closely intertwined with the go-forward security plan; and then of great importance is the insurance issue, because we are all part of the same pool. And absent some sort of government resolution of the third-party liability issues that result from potentially using an airplane as a missile, I think that many of the all-cargo carriers would be very significantly affected, and some of them quite frankly put out of business -- just simply because they can't get insurance.

REP. CLEMENT: What are the merits, in your opinion, of distributing funds granted to us by using the available seat mile standard, and how do we ensure the money goes where it's most needed? For anyone who wants to comment on the panel.

MR. ANDERSON: Yes, Mr. Clement. The available seat mile mechanism has been accepted by virtually every carrier in the industry as the fairest way to apportion funds, because the funds would be apportioned on the basis of capacity immediately prior to the terrible events on September 11th -- and that capacity is a known fact, because we all file data with the DOT under Form 41. So it's a well known mechanism, and I think, importantly, all the carriers agree with it.

As to your second point, the legislation that Congressmen Young and Mr. Oberstar proposed last week, and what we would support here, is a process for the DOT to be certain that the apportionment of those funds is done in an appropriate way, consistent with the methodology laid out by the legislation, and consistent with the Form 41 data, and that all of the airlines would surely be subject to audit with respect to both the losses they state and the funds they acquire.

REP. MICA: The time of the gentleman has expired.

REP. CLEMENT: Chairman Mica, I just want to say -- I know Chairman Mica and myself and several other of our colleagues were in New York City, and we lost a lot of our good friends -- all with the exception of one that were so good to us from the Port Authority. Chairman Mica and I will never forget knowing them and how much we are going to miss them.

REP. MICA: Thank you.

Let me recognize Mr. Gilchrist.

REP. GILCHRIST: I thank the chairman. Just a very short comment, and then I have a question about the optimistic and pessimistic projections for the cash fund by July 2002.

A comment about Mr. De Fazio's interchange with all of you -- and I think prior to September 11th the reality of the psychology of the American public -- is now significantly different post September 11th. And even though this might be a small part of this package which I support, a $3 surcharge might be an incentive to fly for that particular airline, given that the line item is for security. So just a thought about the changing nature of the psychology of the American public.

Mr. Mullin, you suggested that by 2002 the optimistic projection of your cash fund collectively will be at negative $18 billion.

MR. MULLIN: That's correct.

REP. GILCHRIST: And the pessimistic projection would be about $33 billion.

MR. MULLIN: Correct.

REP. GILCHRIST: Given the integrated nature of our economy, and a major part of that being the airlines, in your calculations for the negative and optimistic projections, did that include in any way, or should we consider in any way as far as the cash fund is concerned, the security measures that you recommended and the liability changed that you recommended, and what those recommendations would do as far as their ramifications on the airline industry?

MR. MULLIN: Relative to the security measures, we as an industry probably spend on the order of a billion dollars or so per year now on security, and we have not gone through and really added up what these additional security measures will be. Secretary Mineta --

REP. GILCHRIST: That's a good point and I appreciate that. I guess I'm partly dependent -- and there's no way to project this --

MR. MULLIN: Right.

REP. GILCHRIST: But if we are looking at the reality of the psychology of the American public in their sense of security or lack thereof, the security measures I would assume could have a significant impact on the public's view as to fly or not to fly?

MR. MULLIN: Yes. And we support them all. We have developed them with the federal government, and we think that the federal government has really done a great job working with us very, very intensively to get this new package of security measures developed. But we have not figured out what those cost -- we just put them into place, and said, you know, we'll figure all of this out later. And -- so that is not included in those estimates.

But certainly in terms of our recommendation, we are recommending that the federal government pick up the cost of all security for the reasons I think Mr. Kelly has addressed well before.

Relative to your liability point, we are making the presumption that with this money that we can continue to somehow function as we were before in terms of access to capital markets and so forth. And the presumption before that is that we do not have the liability threat that we have outlined. If in fact the airlines are under this cloud of potential liability, insurance liability going forward, we will never be able to access the capital markets, and hence all of this whole paradigm that we presented to you here today would fall apart. So hence the reason for the integrated package of recommendations as it includes this liability component is -- I don't want to say almost as essential -- but it's right up there -- as the actual infusion of the money.

MR. ANDERSON: If I might add, Secretary Mineta has appointed two rapid response teams on the security issue -- one for airport security and one for security on the airplanes. And there are members of the industry and the airline industry on both of those committees. I believe that Secretary Mineta is hoping to have reports back in a couple of weeks on specific recommendations.

As to the insurance issue, there's -- so long as the industry and our insurers are faced with insuring for acts of terrorism committed by terrorists with our airplanes, we will have very real difficulties both financing airplanes, and in some cases even having the insurance necessary to operate, because the insurance industry, if it believes it will bear the costs, we may not be able to obtain war-risk insurance. Thank you.

REP. MICA: The time of the gentleman has expired.

Let me recognize Ms. Norton. Ms. Norton, too, let me just say there was -- I was quoted as saying -- by a spokesperson -- that I favored the close-down of National. And just for the record, I have done everything I can to get National opened, and that was an error. I just wanted to reassure you and the Virginia members. Thank you.

DEL. NORTON: Thank you very much, Mr. Chairman. I appreciate that change for the record.

This hearing is about, as our documents say, on the financial condition of the industry. But you will recognize that as many members are asking about security as about details of finances. And that's because when you have this kind of a hit they really are the same thing, and anybody who thinks that they are not ought to look at what the chairman has just referred to. Until security is in place the federal government is willing to let the airlines bleed to death at National.

I objected at the meeting to use the word "indefinite" for the closing of National, because that sent a terrible message to the markets, to the industry, to the banks. And Jane Garvey said that they would take steps to correct the use of such lethal language.

There have -- I have a question about not only the cost of security and how those costs should be allocated -- that's part and parcel of it -- but about rethinking security itself. I guess it was Mr. Kelly, and he responded as you might expect the industry to respond, that he didn't want security costs added to the price of tickets. And, of course, we are thinking about security in precisely the terms we were before as well.

I'm trying to -- I'd like to press so that words like "federalization of security" are more than, you know, abstractions that have no meaning. At the moment they have absolutely no meaning. For example, I take it that if costs were borne by the federal government, there would be a radical rearrangement of security vis-a- vis the airlines. For example, although you are regulated, much of security remains in your hand. I mean, to take the most high-profile notion, a pilot decides what'll be done ultimately on a plane if there is an emergency. He's the captain of the ship.

I don't know what federalization means. I'm kind of for it in the abstract based on this notion of, you know, "We've got cops here; why not cops up there?" That really doesn't get me very far. I wonder how you think federalization would operate in light of the decision-making, who makes decisions about security, both in the air and on the ground.

I'd like to know whether you've given any thought, if you don't think that the costs -- if you think that the costs should be borne by the federal government about some sort of hybrid system. Are you thinking outside the box, or are we into the way we were always thinking before? Somebody says it should be paid by the government; somebody says we should not pass on the costs. And basically we've got the same kinds of opposites that we had before September the 11th.

It seems to me September the 11th would jar us to think about costs and decision-making and security in an entirely different way, and I'd like to ask any of you who would like to answer whether you've given any thought to new thinking on security, both costs, perhaps some kind of hybrid, and how the decision-making would operate if it was not entirely in your hands, but also had an important federal component to it.

MR. MULLIN: Congresswoman Norton, we have rethought, in the most fundamental out-of-the-box way, the entire security approach to aviation last week involving every single member, chief executive officer of the airline, in one of the most intensive examinations of that issue imaginable; under fire, I might add. And we really do believe that we have put in place some dramatic improvements in security that can give the assurance to the American public that this industry is safe.

One of the great tragedies associated with this, among the many tragedies, is our own reputation for safety.

DEL. NORTON: Try to be more specific than that. We believe we've put in place -- you know, what is --

MR. MULLIN: For example, in the introduction of sky marshals on the airplanes, which is one of our fundamental recommendations; the increases in the technological approaches with respect to screening people through the computer-assisted profile system; the recommendation that we're making for new hiring and training practices with respect to the people who do the baggage screening.

DEL. NORTON: All of this would be much more controlled by the federal government --

MR. MULLIN: Well, we would --

DEL. NORTON: -- if the federal government were paying for it, right?

MR. MULLIN: We'd absolutely like it to be. I would like to make -- and so I could go through -- there's a long list of things that really do represent a tremendous increase in improvement in it, and with a heavy cost.

I made the observation that one of the great tragedies is our own reputation for safety. I mean, this industry has been unbelievably safe. If you look at the figures, for example, that I remember from 1998 and '99, this industry carried on the order of 650 million passengers in each of those two years without a single fatality.

It is unbelievable, when you look at the number of people who fly on our airplanes so safely and you compare them to any other mode of transportation. This is the most safe mode of transportation known to mankind. And part of the tragedy that we're facing here is that all of this is now suffering under the terrific attack that has arisen --

DEL. NORTON: As long as the federal government pays for it, you're willing to give the entire matter, the decision-making with respect to security --

MR. MULLIN: We are. Of course we are.

DEL. NORTON: -- in the air and on the ground, to the federal government?

MR. MULLIN: Yes. We would absolutely be very comfortable, and, in fact, enthusiastic about particularly on-the-ground security being done by the federal government.

DEL. NORTON: Well, the problem here occurred in the air, sir.

MR. MULLIN: Well, we need to work on that.

DEL. NORTON: We also --

MR. MULLIN: Secretary Mineta has task forces going on this right now. It has a very short time frame coming out for the procedures. Many of these procedures are in place as we speak, and it really represents a complete redo of security.

REP. MICA: The time of the gentlelady has expired. Let me recognize Mr. Horn.

REP. HORN: Thank you, Mr. Chairman. I'm very interested in what this panel is pursuing. Let me ask you, in the next coming month, 30 days, are any of you going to file for bankruptcy?

MR. MULLIN: I would like to ask Mr. Parker to speak to that from the standpoint of America West.

MR. PARKER: (Laughs.) Well, thanks. Mr. Mullin mentioned in his testimony that several airlines are facing significant financial decisions in the next few days. What that means is several airlines are anxiously watching these proceedings, and if something can't be done, would very likely be forced to file bankruptcy in a number of days.erica West is one of those several airlines, and there are others much larger than America West. But I think we provide a representative case study of what's going on out there. America West is a product of deregulation. We're the largest airline formed since deregulation. We have $2.5 billion in revenues, 14,000 employees. And our low fares provide important price competition to some of the larger, older competitors.

And prior to September 11th, we did not have a financial crisis. We had $80 billion in cash. We had strong operating performance and our cash balances were remaining steady. Indeed, we had signed term sheets for $200 million of financing. We were a financeable airline.

Since September 11th, the situation has changed dramatically. There is now a cash drain as a result of the decline in revenues that we've all talked about already, so the cash balance is not staying steady. Indeed, we are draining off something on the order of $5 million per day. Our financing of $200 million has obviously fallen apart and our ability to obtain additional financing is non-existent right now as this is all being discussed. So our access to capital markets is now on hold and looking for stabilization.

So what we need is, one, immediate cash infusion, and two, immediate access to government loans and guarantees to restore capital-market access until stabilization.

REP. HORN: And you think that will solve your problem.

MR. PARKER: Absolutely. I think it'll --

REP. HORN: Let me ask, because Mr. Mullin did mention it, and I was planning to ask this, that three major members of your organization are on the brink. And America West I fly pretty regularly between Phoenix and Long Beach, California.

MR. PARKER: Good.

REP. HORN: Almost every seat is taken. So you look like you've got a darn good operation.

MR. PARKER: Well, thank you, sir. We did. And we will again if we can get this stabilized. But today that flight, Phoenix to Long Beach, has load factors very similar to what Mr. Mullin said his were yesterday of 29 percent. And we need to stabilize this industry. We need to restore consumer confidence, and then we can move forward. But right now we need stabilization, and we need it now.

REP. HORN: Well, do we have more than three on the brink? Mr. Mullin, you're the one that gave me the statistic.

MR. MULLIN: I think it's safe to say that among the top 10 airlines that there are three who are on the brink. Obviously we're uncomfortable speaking about somebody who isn't here. Mr. Parker spoke to his situation and he is here. But there are two other significant airlines that are close to it.

REP. HORN: What about the ones that had their machinery taken over by these hijackers? And what are the numbers on the insurance? Have we figured all that out for American and United about their planes and how many people were in it and what that will cost? And will it be done by the insurance you've got, or do you have to go and put a lot more money with all the suits that will be filing?

So I would think that we ought to put a law on the books that we don't give insurance to hijackers if we can identify them. And it would just be outrageous, I think, for most Americans to give their relatives whatever if they're hijackers. And what do you think on that?

MR. HORTON: I can comment from American Airlines' perspective. With regard to insurance, we are well-covered with respect to the loss of the aircraft. We are well-covered with respect to the loss of life of our passengers and crew. The issue that we've been discussing here this morning is liability for loss of life on the ground and property damage in both Washington --

REP. HORN: Could you speak to the microphone a little more?

MR. HORTON: In both Washington and New York. So that's the issue that we need immediate relief from in order to access the capital markets.

REP. MICA: I thank the gentleman. His time has expired. Let me recognize Mr. Menendez.

REP. MENENDEZ: Thank you, Mr. Chairman. Gentlemen, as I said in my opening statement, I want to help the industry. But we need the American people's confidence in what we do, so I hope you understand the nature of the questions in that regard.

Please, yes or on, if you can: One hundred thousand layoffs, notwithstanding 20-some-odd billion dollars if we were to give you your package?

MR. MULLIN: That number could materialize, yes, sir.

REP. MENENDEZ: So that's a yes.

MR. MULLIN: Yes.

REP. MENENDEZ: Second question: The $340 million a day that you say the industry spends, is that inclusive of items that you would not expend because you didn't fly -- fuel, food, other items?

MR. MULLIN: That's a standard run-rate expenditure, so it would include -- that pertains to a normal flying operation.

REP. MENENDEZ: All right, so then we would -- then we would deduct -- there would be a refined, a net item that you could provide to the committee -- is that correct?

MR. MULLIN: That's correct.

REP. MENENDEZ: Would you provide that to the committee please? On page six you talked about a series of previous expectations for this last quarter and the first two quarters of next year. What were those expectations?

MR. MULLIN: Well, we all had independent forecasts wherein we I think routinely as part of our management responsibilities in our companies forecast out, say, for our board of directors, as to what our expectations are a year in advance. So each of us submitted those expectations, for the first time I might add, to the ATA, who assembled the information to give the picture as to what those expectations were --

REP. MENENDEZ: And collectively do you have that as an association here for the committee today?

MR. MULLIN: The ATA has that. Yes, we could supply that information.

REP. MENENDEZ: Could you supply that? Because for us to understand what 60 percent of previous expectations -- I think the flying public and the Congress is going to want to know what those expectations were to make sure that there is a loss. I don't doubt that they will be, but we want to know that they are reasonable.

You also -- just from my understanding of this, you want the calculation for this assistance to be done on available seat miles. And I think in one of your answers you said that in essence is percentage of capacity. Is it percentage of capacity or percentage of actual flying that particular airline may do? Because you could have capacity that is unused.

MR. ANDERSON: Well, the capacity is an available seat mile, which is one seat flown one mile. It is a standard measure in Form 41. So it wouldn't include capacity that wasn't flying, because it's the existing ASMs, which are the airplanes you actually few in revenue service. It's a very defined term in Form 41.

REP. MENENDEZ: So that in essence means capacity flown?

MR. ANDERSON: Yes.

REP. MENENDEZ: Okay. Now, lastly, I listened to your answers as it relates to security, and I read your statement as you were delivering it, and on 11 and 12, you say provide sky marshals on domestic flights, for the federal government to take all security screening functions, and to provide financial support for all mandated safety requirements. And clearly that is an enormous shift not only of responsibility and money that you are presently to some degree providing yourselves to the federal government on a continuing basis, on a forever basis versus on a shared basis. And while, yes, security is about ensuring the flying public's safety, it also provides benefits to you as an industry. It guarantees the likelihood that your capital -- i.e., your planes -- will be preserved. It guarantees that your liabilities will be lessened. And there's a whole host of other ripple effects, including when you go to the market to borrow.

So what's your responsibility here? I hear you're shifting, but I don't hear your embracing of your responsibility. And I'd like an answer from the industry what's your responsibility as it relates to your participation in security.

MR. MULLIN: We embrace totally our responsibility for safety. There is nothing that is more important to --

REP. MENENDEZ: Including financially as part of it?

MR. MULLIN: We have been embracing that financially. What we are talking about here today is that none of us would be here but for September 11th. We have heard repeated reference to how everything has changed. I think that what we have seen here is that terrorism and national security issues have been introduced into the whole security equation for airlines to a degree that has never been present before. Nobody has ever seen anything like this before. And so we need to think about this, as Congressman Oberstar and others have talked about going back to the very issue of how we treat this as a nation in terms of providing our security for all people. It truly is a governmental function. We as airlines just simply do not have the mechanisms to go forward and provide that --

REP. MENENDEZ: Well, I understand clearly --

REP. MICA: The time of the gentleman --

REP. MENENDEZ: -- the responsibility -- but I'll finish, Mr. Chairman, just a moment -- but I think that you cannot expect an absolute and complete shift and the industry not having a responsibility. And I hope at some point you'll respond to executive positions as it relates to what the industry is willing to do to tighten its belt in that regard.

MR. MULLIN: I think since a number of you have raised that, I should mention that the executives in this industry are going to pay an enormous price for this. The vast majority of us have performance- based compensation as our principal component of compensation -- most of us have it at 75 percent or so. All of that would be clearly wiped out by this. And for those who had stock-based compensation in years past, you only have to look at what's happened to the stock market to understand the damage that has been done to that. So there is going to be a tremendous sacrifice, shared sacrifice which we believe is appropriate. It will happen, and will happen big-time.

REP. MICA: The time of the gentleman has expired. Let me recognize myself for my allotted time of questions. Let me continue in the line of questioning. It is my understanding that this screening process which the airlines now pay for costs you about a billion dollars a year. Is that correct?

MR. MULLIN: Yes.

REP. MICA: I see. Is the airline industry willing to continue to pay that equivalent if the responsibility has shifted to someone else?

MR. MULLIN: Well, we have built into those forecasts, Congressman Mica, the presumption that we will, because --

REP. MICA: Will continue to --

MR. MULLIN: -- it is.

REP. MICA: Okay, because someone is going to have to help pay for that responsibility. You said that $1.3 billion has been identified as a direct hit you took as of --

MR. MULLIN: Correct.

REP. MICA: -- the attacks on September 11th. The balance of everything else is that -- intended to pay back, and loans -- either loan, or loan guarantee or pay back?

MR. MULLIN: We have -- our package just really has two components, the $5 billion of immediate cash infusion that is based on --

REP. MICA: That's not my question.

MR. MULLIN: I'm sorry.

REP. MICA: My question is the direct cost that you are asking for reimbursement for, is that $1.3 billion? And is the balance of everything else going to be paid back, or is it a greater amount? Again, I want to know what would be the loan?

MR. MULLIN: The presumption is the $5 billion will not be paid back.

REP. MICA: Five billion would not be paid back? That's what you are requesting. Okay. Have any of you been dropped by insurers?

MR. KELLY (?): We have received a notice of cancellation, which means that in effect within seven days we have to renegotiate. That doesn't mean that we will be dropped, but they will be renegotiated at different terms, different costs.

REP. MICA: Okay. One of the major questions we are going to be asked is -- and we have a long line of people -- if we pass this legislation this issue is: Why not help others who have been so affected? Maybe you could just give me a quick --

MR. MULLIN: I think that has to do with the fundamental nature of airline service as the backbone of our economy. There have been studies that said of the order of 10 percent of our gross national product is associated with airline travel.

REP. MICA: Right, those are my figures. Well, again, we are going to have general aviation in here. We are going to have small mom-and-pop businesses who literally have been devastated by this --

MR. ANDERSON: Could I make one point on that?

REP. MICA: Yes.

MR. ANDERSON: I think this is the only industry in the United States that has been turned into an instrument of terrorism. It was a U.S. airplane, operated by American and United -- U.S. airplanes -- and that we in fact as an industry have been particularly targeted as a vehicle for terrorism.

REP. MICA: Thank you. Let me ask you this. I only know from news reports and rumblings: Are you going to other committees asking for other reductions, or is this the whole package? I heard reductions or suspension of some of the fuel taxes and others. Is this it, or are you shopping?

MR. MULLIN: No, we are not shopping. This is our package.

REP. MICA: The other thing too is Southwest Airlines -- and I may be wrong, but I heard one of the airlines say that they had sat down and had worked something to keep people employed. Why can't you work with labor and others? It didn't sound like from Mr. Hoffa you all had sat down with labor yet to discuss the alternatives to putting everybody on the street.

MR. KELLY: I can just say --

MR. MULLIN: Go ahead, John.

MR. KELLY: Okay. I would just like to say that from our standpoint we met with our labor leaders, our master executive council chair, immediately when this happened, and we told them that we were not going to be precipitous in taking an action. We have not laid off people. If we move forward, we have said to our employees we will be as creative as possible, in whatever way that means -- job sharing or --

REP. MICA: Well, that's --

MR. KELLY: -- anything we can do to minimize the impact.

REP. MICA: I'd like to call everybody from ATA to respond to the committee and let us know what you can do. This isn't the time to be laying people off. It's the time to be hiring people. Some people may have to evenly share the burden in all of this.

One final question -- my time is about up -- cancellation of aircraft orders. I'd also like you to supply to the committee what aircrafts have been canceled and why and what financial reason. And then I want to know also if we give you this money that those orders will be restored, because we have reports now of some 30,000 losing their jobs.

My time is expired. Let me recognize the gentle lady from Florida.

REP. BROWN: Thank you, Mr. Chairman. And I think your testimony, Mr. Mullin, was very informative. I do have a couple of questions. And I think the first one is I note that all of the carriers are not here -- USAir is not here, and as I told you that's my carrier, and there are some fine men and women that work there. If we pass this package, I would be very concerned if I read in the paper a week later that some executive received $8 million. So what kind of assurances do we have for people that participate in this program that we are going to safeguard the taxpayer dollars?

MR. MULLIN: I think that you will get those -- be happy to share with you our compensation programs so that it is well understood --

REP. BROWN: I'm not talking about Delta. I'm talking about everybody that participates in the program.

MR. MULLIN: I'm sure USAirways would agree also, to share with you the basis upon which they are compensated, and see what happens if this happens.

MR. ANDERSON: Those will all be publicly available, because our 10(k)s all include our salaries every year. And I can tell you at Northwest that we are going to take significant reductions in all management compensation, incentive compensation areas.

REP. BROWN: And you know I am not saying this is going to happen, but I am saying I would not want to read this. And I want to see some safeguards to make sure it does not happen, that some executive give themselves an $11 million bonus. We'd look pretty bad to the public.

MR. ANDERSON: Well, we would look even worse, because it wouldn't be fair in the circumstances we find ourselves to be --

REP. BROWN: Laying off thousands of people --

MR. ANDERSON: To be asking you for what we are asking you for, and to be having the very difficult task of reducing our head count to also at the same time enrich ourselves. That just doesn't work, and I don't think any executives at any of these airlines are going to do that.

REP. BROWN: I have a couple of questions about security. As far as the sky marshals are concerned, I noted in your report you said we should have them all on domestic. I don't understand why not all flights.

MR. ANDERSON: They are already there on the international flights. And what we would propose is that Secretary Mineta has these two committees that are already beginning to do work, and they'll bring back specific recommendations in a couple of weeks for both airport security and aircraft security.

REP. BROWN: One other thing. Mr. Kelly, I noted that you said -- and this is a serious I guess consideration, about the $3 for security -- one of the things that the public understands is a user fee, and I think when you said that you want the federal government to take over, you know, the financing, you are the federal government. It is all of our dollars, and we have got to figure out what's the best way to install the safety measures. Because I came up last night -- there was nobody on my flight. And all members of Congress for one thing, we know something about the industry because we're on planes, all of us, at least two or three times a week. So if we don't feel secure -- if the public doesn't feel secure, they're not going to fly.

MR. KELLY: And I'm in total agreement with you, Congresswoman. And the bottom line, as you well know, and we all know, is that we are all going to pay. Whether we pay it in a fare or we pay it in a ticket tax or a user fee or we pay it in general taxes, we the citizens end up bearing the cost one way or another. And the question really is how should we best accommodate that. And my point is that given a struggling industry adding that cost on, giving the elasticity issues is perhaps not the best way to accomplish it. That's the only point we are making.

REP. BROWN: Okay, Mr. Chairman, I --

REP. : Ms. Brown, would you yield some time to our colleague Mr. Doggett.

REP. BROWN: Yes, please.

REP. MICA: No, I'm sorry, we can't do that -- there's already been requests -- if they're not a member of the committee -- you can only yield to a member of the committee. Let me then yield to Mr. LaTourette.

REP. LATOURETTE: I thank the chairman very much. Gentlemen, at the end of last year there was a lot of consternation by some in the Congress about money that we provided to the Medicare system, and particularly insurance companies that handle senior HMO products, thinking that they would use that money to increase coverage -- go back into areas that they had abandoned. And the GAO came out with a report indicating that a number of those companies then put the money in their reserves, which is bad.

If Ms. Tauscher is correct that for every one airline job there are six other jobs in the economy spun off -- and I think that's a conservative number -- one of the concerns that I have is if this package goes through and you're made whole, I am aware that at least some of the airlines represented at this table have sent out letters to their suppliers since the tragedy of last Tuesday, asking the supplier of parts to reduce their open invoices -- that is, stuff you ordered before September 11th -- by 12 to 25 percent. My concern is that if this package is approved by the Congress -- and I happen to be one that fully believes that you are entitled to it and you need it and your industry is one that is important -- my concern is that open invoices -- the guys and gals who are making the parts that go into the engines and everything else that you need to fly -- will you still be asking for that 12 to 25 percent decrease on open invoices? And, Mr. Anderson, maybe I'll start with you.

MR. ANDERSON: Since I sent the letter, yes. (Laughter.) Yes, we will still be asking for the reductions from our suppliers.

REP. LATOURETTE: And then how are we going to be able -- so we will make you happy and healthy, or at least bring you back to a level, but what about the other folks that operate the machines in our districts?

MR. ANDERSON: Our industry, as you said -- probably there's -- for every one airline job there is more than six other jobs. And as sort of the linchpin of the whole aviation system, how we go, so goes the rest of our suppliers and the other people that depend upon the industry. So if you fundamentally want to be able to assist Pratt & Whitney, Boeing, General Electric, our principal suppliers -- Rockwell, Allied Signal -- the best way to do that is to keep us stable, because the impact to our suppliers will be even more significant without this package, and there will be even more ripple effect in the economy.

REP. LATOURETTE: Well, I fully understand that. That's the argument that the committee staff makes to me. But I'll tell you this: if you are made stable, and you all have represented to us that you weren't doing great before September 11th, but you were doing okay, why then should the guy -- the second-generation machine shop that makes a little ignition switch to help in cases of flame-out, take a 25 percent hit when you are going to be made whole?

MR. ANDERSON: Well, I believe that Leo described to you the fact that the revenue falloff and the direct impact of these acts of terrorism to the industry between now and June by conservative estimates is 18 million (sic) -- by pessimistic estimates, it's 33 million (sic) --

MR. MULLIN: Billion.

REP. LATOURETTE: Billion.

MR. ANDERSON: Billion, excuse me. We wouldn't be here if it was millions. And so we have a wide range of potential losses that we yet have to make up over and above. So I think the members that talked about executive compensation and everybody participating -- when we go through these kinds of events, our suppliers -- our suppliers likewise contribute.

REP. LATOURETTE: I got it. Is there anybody that has a different answer than Mr. Anderson?

MR. MULLIN: The only one I would add is that many of us, in light of the difficulty that we were having before this, had been engaging in what is called supply-chain management in very aggressive discussions with our suppliers in the face of the recession, and unfortunately -- and to echo Richard, well I -- you hate to see a small machinist go out of work, and we all are going to have to be very, very aggressive in controlling those costs. At Delta Airlines $7 billion of our roughly $15 billion of expenses each year are supplies. And so to get a hold of those costs, we definitely are going to have to attack that component of our expense base.

REP. LATOURETTE: Could you in the 30 seconds that I have left someone comment on what the intention is under this package in terms of honoring passenger tickets that have been purchased for routes that are discontinued or a trip that no longer exists because an airline ceases to exist?

MR. ANDERSON: We routinely accommodate those under our (tariffs ?) -- actually, we regularly go through schedule changes in the industry, and you pull service, cancel service to cities. And we have a regular process for reaccommodating people across the board.

REP. LATOURETTE: Thank you.

REP. MICA: I thank the gentleman. Let me recognize Mr. Filner.

REP. FILNER: I thank the chairman. I guess if this weren't an incredible national crisis I would be tempted to comment on the irony of corporate America lined up here asking the federal government, the hated federal government, for an $18 billion hand-out, the same corporate America which resists a dollar increase in the minimum wage or grant programs for helping poor people as giving a hand-out to the undeserving, or resists collective bargaining agreements. I would be tempted, but I'll resist that temptation today.

We talked about layoffs. How many of you up there have laid off people already or intend to this week?

MR. MULLIN: I have not yet.

MR. KELLY (?): We have not laid anyone off.

MR. ANDERSON: We intend to.

MR. PARKER: We've announced intentions to, but not this week. We announced this week, and we plan to do so --

REP. FILNER: Do we have any assurance that money that you are asking from the federal government will either forestall or allow us to rescind those layoffs?

MR. MULLIN: I think generally speaking there can be no assurance, particularly given the uncertainty that we have with respect to the amount of traffic that we are going to be flying. If we have load factors that prevail, such as have been cited here, with the demand as low as it is, it just makes no sense to continue to flow those airplanes. And if we don't fly --

REP. FILNER: Okay, so it seems to me we have a job up here as a Congress to not only make you whole, but to protect those who, also through no fault of their own, are thrown out of work. When you were asked -- I think when Mr. De Fazio asked the question of what protections would you recommend for these laid-off workers, such as health benefits that would continue or other benefits, Mr. Anderson -- said, Well, these are protected in collective bargaining agreements. The guy on your right and the guy on your left sitting up there, I would argue, do not put much faith in collective bargaining agreements, and don't have those for most of their employees. So how are they going to protect them, since you all don't -- a lot of you don't believe in collective bargaining agreements with -- how are we going to protect the employees then? Since your answer, Mr. Anderson, as I heard, didn't cover anything Mr. De Fazio asked. But I'd like to hear the ones who don't have the collective bargaining agreements answer. How are we going to protect those folks?

MR. MULLIN: I can just say for Delta, which is perhaps the least unionized of all of the airlines, that we will --

REP. FILNER: You've got one more here --

MR. MULLIN: -- absolutely protect our employees to the same or even more of a degree than those who are --

REP. FILNER: You are going to give them health insurance for over the time, for example?

MR. MULLIN: We will do the best we can --

REP. FILNER: Are they going to have ways of either counseling or training for new kinds of jobs? I mean, are you going to do that?

MR. MULLIN: We will do the best we can. We are working on those programs right now.

REP. FILNER: Well, it seems to me, given that answer, it's up to this Congress to guarantee that that occurred, since your answer is to the best of your ability. I think we have to guarantee it. In fact, as I listened to some of the answers, whether we are talking about security or we are talking about passenger rights or we are talking about employee rights, I think we need a permanent oversight commission as part of this legislation, Mr. Chairman, and Mr. Ranking Member, that is going to make sure that these rights are protected, and that the security does take place. I mean, this is a group that keeps resisting government intervention, is here asking for 18 billion. It seems to me that we have a right to insist on certain return obligations for the bail-out that is being requested here.

MR. MULLIN: Sir, may I comment on one thing?

REP. FILNER: Sure.

MR. MULLIN: You give me the opportunity to refer again to the bail-out. We absolutely do not feel we are in a bail-out here. We are in an industry-stabilization effort that results in a terrorist attack using our airplanes.

REP. FILNER: I understand, sir. But again, those people who are out of work for the same reason -- I have heard Mr. Abercrombie, with great eloquence, if I may use -- that his whole state is threatened with bankruptcy because Hawaii depends on tourism. Did I get that right?

REP. ABERCROMBIE: You got it right.

REP. FILNER: Now, aren't they entitled to however you want to phrase it. All of the travel agents in my district and every district around here are out of business virtually. Aren't they entitled to the stabilization based on however you phrased it? All of the folks who have -- we have heard here from many people who have lost their jobs, lost their businesses, lost their livelihoods , lost their futures, because of what occurred -- not from their own doing -- why aren't they entitled to the same stabilization that you are requesting? I don't buy the argument that was made that because of your unique status you are the only ones entitled. You are a particular industry that is vital. We all agree to that, and no one -- nothing I say should not undermine that sense. And you are going to get a package here. It just seems that this Congress should be looking at these other factors also.

You have resisted, by the way, as an industry a passenger bill of rights.

REP. MICA: The time of the gentleman has expired.

REP. FILNER: Would you mind having this incorporated in this bailout?

REP. MICA: The time of the gentleman has expired; if someone wanted to respond.

MR. SMITH: Well, I just want to say, you attributed to me some sentiments. To the best of my knowledge, Congressman, I've never spoken to you. And I certainly believe in the right of collective bargaining and --

REP. FILNER: Does FedEx have a bargaining agreement?

MR. SMITH: FedEx has no intention of laying people off.

REP. FILNER: But do you have collective bargaining?

MR. SMITH: We do. We have an agreement with our pilots.

REP. FILNER: Your pilots. How about everybody else?

REP. MICA: That will have to suffice for a response.

MR. SMITH: Well, that's their choice.

REP. MICA: The time of the gentleman has expired, and we have many members waiting patiently. Let me recognize Ms. Kelly. Thank you.

REP. KELLY: Thank you, Mr. Chairman. Gentlemen, you are here asking for money. The money that we have to allocate to you comes out of the pockets of the citizens of the United States of America. It is our fiduciary responsibility to make sure that that money is spent wisely. That's what we are elected to do. That's why I believe you hear these concerns.

I have a certain concern that Mr. Filner alluded to. The very first question I wrote down here that I wanted to ask you is the fact that -- especially I'd like to address this to Mr. Mullin and Mr. Horton -- in some times past, you have chosen to reduce the percentage that travel agents are able to achieve when they sell one of your tickets.

In the event that you get this bailout, so to speak, would you be willing to either -- to consider rescinding that or reducing that amount so that we can let this have a trickle-down effect at least to some of our other people who need some help here? And I'm asking the two of you.

MR. MULLIN: Congresswoman Kelly, at this point, and in light of the terrific challenges that we have, I don't think we can make any promises with respect to certainly rescinding an expense component that has already been taken. I think our challenge is going to be even greater moving forward to move our expenses down. Our industry doesn't have any revenue. I mean, this revenue pattern that we've got right now -- if there's no money coming in, then we are going to be having to look everywhere we possibly can in order to manage our expenses most effectively. So I don't --

REP. KELLY: Mr. Mullin, that's exactly what the travel agents have to say. I understand that the travel agents, I've been told, face a loss of approximately $4 billion in the next four weeks.

MR. MULLIN: We are inextricably linked to the travel-agency sector. I mean, we have had a partnership with them even given the changes that have been made in the pricing going forward. And we have to work very closely together to restore the revenue stream of the airlines and the revenue stream on which they depend. So we will be working very, very closely. I responded to your specific question pertaining to a rescinding of an expense item.

REP. KELLY: Mr. Horton.

MR. HORTON: Well, I would essentially agree with what Mr. Mullin had to say. And I would second something he said earlier, which is we're not seeking what some call a bailout. We're seeking a recovery to the sorry state of our industry before this event occurred. So all of us are going to be looking for every opportunity we can to make our companies more cost-effective. So I don't think we can make any guarantees about any of our costs.

REP. KELLY: In other words, Mr. Horton, you are saying that you want to see us give you money which then, as I think other people are concerned about, will stay within your own industry and not trickle out. Is that -- am I -- do I misunderstand you? I see --

MR. HORTON: Let me be clear. Our industry was headed for $3 billion in losses this year before this event occurred. It would be irresponsible for us, as managers of these companies, to do anything but look for opportunities to make our companies more cost-efficient and generate more revenue. And that's what we'll continue to do.

REP. KELLY: Mr. Parker, I saw you --

MR. PARKER: Yeah, if I may. I mean, I think there's a huge trickle-down effect. People are not avoiding Hawaii because they don't want to go to Hawaii. They're not going to Hawaii because they're afraid to fly. We need to stabilize this air travel industry first. Then that will restore -- then restore consumer confidence in air travel. Once we do that, people will begin going to Hawaii. Travel agents will begin making more money again. We'll be able to buy more airplanes. We'll be able to hire more people back. But you have to start with getting people back in the air, and you need to start that by what we're asking for here.

REP. KELLY: Thank you, Mr. Parker. I'd ask --

MR. : (Off mike.)

REP. KELLY: Let me just ask one -- I have a very short time here. I want to just ask one more question. If your planes are flying, and they're large planes and they're flying with not so many people, is there some reason why you can't fly smaller planes and fill those planes to capacity?

MR. MULLIN: Yes, we will be doing that. Delta, I can speak of Delta in particular. We have the largest commitment of any of the airlines to regional jets, and we would be particularly aggressive in deploying regional jets on routes where the demand has fallen, just as fast as we can get them.

REP. KELLY: And that would reduce your costs, I assume.

MR. MULLIN: Yes. I would want to make one last observation here. The context of this element of the conversation might suggest that we're on a program of reducing jobs or, in some sense, acting against travel agents who in many respects are our partners. Our whole goal through this whole conversation we've been having here is to stabilize this industry such that we can increase jobs. Our goal is to get those jobs back. None of us wants to engage in the kind of activity that we've had to outline for you today.

REP. MICA: The time of the gentlelady has expired. Thank you.

REP. KELLY: Thank you.

REP. MICA: Ms. Johnson.

REP. JOHNSON: Thank you very much, Mr. Chairman. Let me first say that although this is not considered a bailout by the airlines, the people of the nation feel that it is. And I guess it's in the eyes of the beholder. I am concerned about recovery procedures, your out-placement plan and your plan to re-attract passengers. Are you going to speak for all of the industry?

MR. MULLIN: It would be -- we had a little trouble hearing you. Could you -- I apologize. I heard the plan to attract passengers. Did you say out-placement plan?

REP. JOHNSON: Yes, in your recovery procedure, do you have a plan for out-placement of employees? And what is your plan to re- attract passengers?

MR. ANDERSON: I'll speak on behalf of Northwest. With respect to our employees, the provisions of our collective bargaining agreement govern layoffs, and the provisions of those agreements will apply in these cases. And most of the other carriers have similar provisions.

The second piece is -- I think the first and foremost thing the industry is doing is running a good airline. The industry actually today is running very well. We've got to provide safe, secure, on- time, good customer service to our passengers, and we need your assistance and the assistance of our government in re-instilling confidence in the traveling public that it's safe to fly.

So I think those end up being -- re-instilling the confidence of the traveling public in the safety of our system is going to be the most important step that we can take as an industry.

MR. KELLY: There will also be fair discounts. I am absolutely assured of that. Whenever passengers aren't flying, we will be out giving them a reason to go flying again. And that has already begun. So building confidence on one hand and some stimulation on the other hand, Congresswoman.

REP. JOHNSON: Now, you indicated in testimony that improvement of security and modification of some of the planes, you expected the federal government to rise to the leadership in those areas. Will any of these federal dollars be used for those purposes?

MR. MULLIN: We would anticipate, over time, establishing separate accounting for that so that, to the extent that the federal government does bear the responsibility, the cost of responsibility for that, it would be very clear about that. As Congressman Mica indicated, given that we are currently spending a billion dollars or so right now on security, it will need to be worked out as to who it is, who's responsible for what component of the security that goes forward. And as mentioned in previous questions, Secretary Mineta does have a task force that has been established with members of our group here on that task force. It is due to report on such issues within a short period of time.

REP. JOHNSON: So I think I hear you in your answer saying that that is an expectation that that's additional money for the federal government to pick up, not included in this initial request.

MR. MULLIN: We have not put into this initial request any estimates for the added expenses that will be presumed. As mentioned in answer to a previous question, we just put them in place and said we'd figure out the cost of it later.

REP. JOHNSON: Well, I think that the concern that most of the members of this committee have is that the majority of the people who will be inconvenienced, and are already, grossly outnumber the persons that will survive in the airline industry. And this is a lot of money being taken away already for programs that would probably be allocated for education, Social Security reform, Medicare reform, prescription drug assistance. And so when we have to look away from that to do this, we have to have some assurance that you are thinking about the people that support your industry as well.

MR. MULLIN: Thank you.

REP. JOHNSON: Thank you very much. Thank you, Mr. Chairman.

REP. MICA: The gentlelady yields back the balance of her time. Mr. Simpson, you're recognized.

REP. SIMPSON: Thank you, Mr. Chairman. First of all, let me say that I hope that you don't go to regional jets from Dulles to Salt Lake City, because I don't want to sit on one of those. (Laughter.) I understand the idea of getting smaller planes that are fuller.

MR. MULLIN: That depends on American Airlines.

REP. SIMPSON: (Laughs.) Secondly, Mr. Filner mentioned the workers and his concern for those. I think we all have that same concern. I think Mr. Hoffa mentioned during his testimony the idea of some funding for transition funding for those employees that are being laid off.

It's not uncommon or unroutine for Congress, as an example, when contractors at DOE sites lay off employees, that we include transition funding, retraining funding, those types of things for those types of employees. And I think that's totally appropriate in this situation also, and I hope that Congress looks at that as part of a total package, because there are going to be some layoffs that are probably going to be permanent. As you said, you reorganize your industry due to the situation that it's currently in.

It was mentioned -- Mr. LaTourette asked the question about re- accommodation of those ticketed passengers that have tickets, that the flights have been canceled or are no longer flying or whatever. And I think Mr. (Holland ?) mentioned or Mr. Parker mentioned that people aren't going to Hawaii because they're afraid to fly. What is that re-accommodation? Is it -- do they get their money back, or are you ticketing them on another flight? Because if they're afraid to fly, reticketing them doesn't help.

MR. KELLY: Yes, in that case they would be entitled to a refund. And a number of us -- I'm not sure whether all -- have waived some of the fees that typically apply to refunds. So they can either be re- accommodated or they can have their refund.

REP. SIMPSON: In the $5 billion that is going to go out in direct payments in the stabilization funding, as you've called it -- and I agree with you, that's what it is -- it's going to be based on ASMs?

MR. MULLIN: Correct.

REP. SIMPSON: There are high-cost carriers and low-cost carriers. Some regional carriers are much higher-cost. We can tell that by the fact that a ticket from Boise to Idaho Falls costs more than a ticket from Dulles to Salt Lake City. Is there any accommodation made in that for high-cost versus low-cost carriers?

MR. MULLIN: No, there isn't. And we just felt that the allocation based on essentially capacity in the sky was the fairest way to do it. We don't want to have any kind of swing on this based on the cost structure or even the competitive structure that had prevailed prior to September 11th. So none of those factors are taken into place. We talked about many different mechanisms to do it, and we think that the ASM is the fairest way to do it with the modification that Fred Smith has made for cargo carriers, which is he said it accounts for about 10 percent of it, that this is the fairest way.

MR. KELLY: Congressman, we're --

REP. SIMPSON: Do the regional carriers agree with that?

MR. KELLY: We're a low-cost carrier. Doug is a low-cost carrier. And we agree with this allocation method. We've all agreed that this is the fairest way to allocate the money. And again, the money has to then be justified by actual expenses in an audit after the fact.

REP. SIMPSON: And as I mentioned during my opening statement, I'm one of those individuals that have some reservation about this. And I guess my reservation stems from the fact that there are hundreds, if not thousands, of companies across America that have suffered losses, not because of their own fault, because of this act of terrorism; many of them in the World Trade Center.

How -- if we put this stabilization funding out, how do we justify not helping all of those hundreds of thousands of companies that have been severely impacted by this also when they come before us -- the insurance company that insured the trade towers or any company that was in there that may totally be lost now?

MR. MULLIN: I think, sir, that I'd respond in making just the affirmative case for airlines rather than arguing against anybody else. I certainly wouldn't want to make that argument against anybody else. But the affirmative case for the airlines, I think, derives just from the fundamental role that we play in the economy and the support that we give to all of those other folks that you were mentioning. I mean, this country -- this economy of this country, I think almost everybody would agree, simply could not operate effectively without an effective aviation system.

And that is the essence of our argument. If we didn't have that fundamental underpinning to the argument, we shouldn't be here. And so the support of us is really, we would argue, by the multiplier effects that have been mentioned in terms of those added jobs and added contribution to the economy that is created by airlines is the fundamental reason we are here. This economy needs a fundamentally effective aviation sector. Without it, all of the problems that we're talking about would be far, far worse in every sector of the economy.

REP. MICA: The time of the gentleman has expired.

REP. SIMPSON: I appreciate that. Could I ask one --

REP. MICA: I'm sorry, I can't do that. I have folks waiting patiently. Mr. Lampson.

REP. LAMPSON: Thank you, Mr. Chairman. I yield to the gentleman if he wants to ask a quick question.

REP. SIMPSON: Thank you. I appreciate that. There was -- one of the fundamental things we have to answer here in Congress is an airline industry that, as was mentioned, was going to lose $3 billion this year, anticipated to lose $3 billion. I mean, we understand the damage that was caused and what that's cost the airline industry now. I want to make sure that what we're doing is getting money out to address the problems that were caused by this accident and not by management decisions that caused a $3 billion loss this year.

MR. MULLIN: We could not share your view more. I mean, and everything that we have talked about here today stems from the September 11th tragedy. But we are absolutely prepared to be audited on that fact, and so we share your view.

REP. SIMPSON: Thank you. Thank you for the time.

REP. LAMPSON: Reclaiming my time. You're welcome, Mr. Simpson. I am a little concerned about what is happening to some communities where there are notices of cessation of operation by commuter activities. Would you all comment on some of that, how extensive you think it might be? So far it has not been extremely so. But how quickly will we see a return of flights where there have been not the best markets in the world, but at least service from areas that are desperately in need of it?

MR. ANDERSON: At Northwest, we tend to serve a lot of less- populated areas, so it's an issue that's particularly important to us. The 20 percent reduction, as you look at how schedules seem to be flowing out, seem to be more in frequency than terminating service to destinations.

One of the proposals that we have talked about as an industry is the ability for us to discuss together scheduling so that, in the event there are a couple of carriers in the market, that we could talk to each other about the possibility of one carrier staying in a market so that a city -- (inaudible) -- that was previously served. I think, in your situation, that Continental has announced pulling out of some cities like Tyler and the like in Texas.

REP. LAMPSON: Thank goodness not Beaumont yet. (Laughs.)

MR. ANDERSON: Not Beaumont. And so we've discussed that. We all take seriously our responsibilities for service in the smaller markets. And I know at Northwest we have particularly looked at our schedule cuts in the Upper Midwest to make sure that we don't terminate service to any cities but that, in effect, we have reduced frequency.

And so a lot of the cuts that you've seen in this 20 percent, when you see how it's cascaded across everyone's schedule, it's been frequencies, not destinations as much. But I do think the committee should consider separate from this -- and I would have said this prior to September 11th -- our essential air-service marketing program. And I know Congressman Oberstar has had that as an issue from time to time.

REP. LAMPSON: Anything any different from anyone else on this? Thank you. There's going to be other kinds of costs that local government and the federal government is going to be facing. I learned of some of the things in my visits the other day that may be as simple as having to give up parking spaces, parking lots that were within a certain distance that can no longer be.

We're having to find ways, obviously, that we're going to have to make the priorities of where we're going to put dollars to make this overall industry work. What other kinds of things will the industry suffer from, not just the airlines themselves but airport-related or other industry-related? What might local and federal government be looking at in a total cost to help the industry function properly?

MR. ANDERSON: I mean, the immediate costs -- and I don't have an estimate on these, but I'm sure that ACI and AEEE could give you an idea -- is that airports are essentially sole-source funded by concession revenues and airline rents and landing fees, and local airports are financed through general airport revenue bonds. And when we have this kind of cessation of activity at airports and reduction in parking revenues and reduction in concession revenues, the financing mechanisms behind our airport and the financial viability of our airports, particularly some of the smaller airports, will be stressed.

In addition, I think you're going to see, at the same time, at many airports you've seen significant additional costs under part 108 of the federal aviation regulations which governs airport security. And so you also see additional costs, for instance, at Houston Intercontinental Airport. The cost of additional police services fall on the Houston police department.

REP. LAMPSON: Right, exactly happening. With the few seconds that I probably have left, will someone tell me again a little bit about the insurance and the difficulties that you're facing? Is there any such thing as loss of business insurance? Does anyone have it? And then what will not be or cannot be covered by insurance as it exists right now.

MR. HORTON: Well, this is obviously a rapidly-changing environment, the insurance part of our business. But what we are hearing from our insurance companies is that we will see dramatic increases in insurance rates. We will see limitations on the amount of insurance that we're able to achieve. And we've also heard indications that we may or may not be able to get war-risk insurance that covers damage and loss of life on the ground, which is the very issue that we've been discussing here today.

REP. MICA: I thank the gentleman. His time has expired. Let me recognize the gentleman from Georgia, Mr. Isakson.

REP. ISAKSON: Thank you, Mr. Chairman. Mr. Mullin, you had said earlier that you all were before no other committee of Congress for any other benefits other than this particular package. Is that correct?

MR. MULLIN: This is our package, yes.

REP. ISAKSON: Okay. And so there is no request for any abatement or deferral of taxes. Is that correct?

MR. MULLIN: No.

REP. ISAKSON: With that in mind, do you know, Mr. Mullin -- and maybe Mr. Horton might be the best gentleman to address this -- do you happen to know how much, in federal taxes, payroll taxes, the employer's share, ad valorem taxes, equipment taxes and other taxes the industry paid to the United States of America last year?

MR. MULLIN: Thirty billion.

MR. HORTON: Thirty billion.

REP. ISAKSON: All right, I want to make a point, for those that have asked very good questions with regard to employees, subcontractors, ancillary people and the like, and our responsibility to the taxpayers. As I understand it, the airline industry last year collected, mostly from us citizens, $30 billion and turned it over to the government in various forms of taxes --

MR. MULLIN: That's correct.

REP. ISAKSON: -- that, if the airline industry goes out of business, will be a net reduction in the revenues of the federal government of the United States of America. Is that correct?

MR. MULLIN: That's correct, sir.

REP. ISAKSON: It's also correct that your estimate of the $18 billion shortfall is subtracting all the money you pay to subcontractors' employees and people that make your business run from the amount of revenue you anticipate getting. Is that correct?

MR. MULLIN: That is correct.

REP. ISAKSON: So the way I get it, it would cost the country $48 billion if we don't do this -- $18 billion that's lost and the $30 billion revenues that are (over it?).

My last point -- and I'm sorry I'm talking rather than asking -- but my last point is this. The cost to us not to judiciously stabilize the industry would probably have a multiple factor of 100 times if all the other industries who we fear for were out of business.

My last point. I want to commend American and United. I assume, by accepting the available seat capacity formula, that many airlines have taken a very unselfish position in unifying behind this package, and I want to commend them for doing that, because I think that shows the best in your industry, and I think that's important.

Secondly, I have to inject into the record, for those that have talked about the workforce, Air Tran voluntarily reduced their pay by 9 percent yesterday, the pilots. And I'm assuming that in your cost assumptions that derived in the $18 billion shortfall, there are many sacrifices that were presumed in that cost basis before you determined that number. I'm assuming that's correct as well.

MR. MULLIN: That is correct.

REP. ISAKSON: Thank you, Mr. Chairman.

REP. MICA: Thank you. Mr. Sandlin.

REP. SANDLIN: Thank you, Mr. Chairman. I'd like to say thank you to all of the folks that are testifying here today, and we extend our sympathies to you and appreciate your appearance. And I want to say that Congress wants to work with you to be sure that you have the relief that you do need presently and that you have long-term viability. We've got limited time and just many, many questions.

Clearly you need some capital infusion, and I was looking at the Morgan Stanley letter. And without going through it, it says there are virtually no markets open to the carriers. The credit rating agencies have downgraded the debt securities. Investors are nervous. If these funds are advanced to you, do you feel protected, under the proposed legislation, from any extraordinary remedies, such as sequestrations or other demands from your creditors by then deeming themselves to be insecure?

MR. MULLIN: I think if this package is put in place, we'll find a way to access the capital markets in a sensible way.

REP. SANDLIN: Let me ask you another question, moving to a different subject. Of course, we do want to work with you. We want to help you and work in partnership. Mr. Mullin testified a moment ago and caught my attention on layoffs. There have already been thousands. And it seems like, from what I've read and what you've testified, that 20 percent industry-wide seems to be fairly common.

And I would like to compliment the Delta flight attendants that I understand have volunteered to work for comp time or delayed compensation, and I noticed the president of Mesa has reduced his pay by half and the pilots at Air Tran have been mentioned, 22 percent reduction.

I've been concerned at looking at compensation, though. I noticed that Continental Airlines announced 12,000 layoffs, but they say they have no plans to ask executives to take a pay cut. And at that particular airline, the top executive makes $42 million over five years. No one at Delta -- and Delta said no one at Delta has been asked to take a pay cut yet and may not be, but nothing has been ruled out, so I suppose that's a possibility. American Airlines refused to comment on executive compensation. United didn't respond. U.S. Airways, their top executive makes $11.57 million last year; the top five executives, $28.5 million last year.

And I compared that to flight attendants. For example, a first- year flight attendant makes $14,850 a year; six years, $22,000; 14 years, $28,000. The Airline Pilot Association said the average salary at major airlines is $25,000 to $30,000, with a top senior captain going international $250,000 a year; the point being, we want to work with you, and everybody has to cooperate.

And can you help us in encouraging the executives to also make some changes? Because we can rehire thousands and thousands and thousands of special-services people and flight attendants and mechanics and support personnel with just a little bit of help from executives. Can you do that?

MR. MULLIN: Yes.

REP. SANDLIN: And do you think that that's in the works? I mean, have the executives discussed that?

MR. MULLIN: I think that when one looks at executive compensation -- and some of those numbers that you cited, not to get overly technical, but the big numbers are driven by some kind of (black shoals?) estimate of the value of stock options --

REP. SANDLIN: I understand that.

MR. MULLIN: -- which have a guess as to what they would be worth in the future. In point of fact, with what's happened in the stock market -- I can just speak for Delta -- the stock options are worth nothing.

REP. SANDLIN: Right. I understand that. But on the pay, you can work with us and ask them to sacrifice so that we can get some of our families back to work?

MR. MULLIN: Yeah, a significant portion of our cash compensation is also performance-based. And when our organizations don't perform, that doesn't come in.

REP. SANDLIN: When I mentioned in my opening statement that some in the industry have blamed Congress for these layoffs -- and all of you I saw shook your heads no, that was not so -- can you commit to working with us as quickly as possible getting these instituted?

MR. MULLIN: Yes.

MR. ANDERSON: Yes.

REP. SANDLIN: And would each of you agree that even though we are taking this -- the time to have these hearings today -- that holding these hearings and committing to work with President Bush to develop some sort of long-term plan rather than rushing to judgment without a hearing, taking this time has in no way caused any layoffs, has it?

MR. MULLIN: No.

MR. ANDERSON: Not at all.

REP. SANDLIN: Would each of you agree with that?

MR. MULLIN: We are grateful for having this hearing. We really appreciate it.

REP. SANDLIN: Well, I appreciate that. And let me say one other thing -- I noticed Mr. De Fazio was asking about the fees for security. I think American Airlines has testified before that they support that, or something along those lines. Are the other airlines -- do you feel like that's a reasonable thing to do, and say the passengers will do that? Because I tell you I think people would. We are talking two or three dollars. I think people would pay $10, $20, $50 a leg if they thought it went to security. What is the position of the other airlines on that sort of theory?

MR. MULLIN: Well, I'd just comment. One of the reasons that you hear this is that all of us are willing to consider any reasonable mechanism for paying for the security. And, as I mentioned earlier in my statement, safety is our overriding objective. Nothing even comes close to safety. And so whatever mechanism is decided is fine. I think in terms of perhaps say with some of the larger carriers versus some of the low-cost carriers might say, is that when you put an added fee on a ticket, where price is a major objective -- and it certainly is the case with respect to how the discount carriers compete -- putting a $3 fee on a smaller ticket base represents a much more substantial --

REP. SANDLIN: I understand. But I think you'll see the public --

REP. MICA: The time of the gentleman has expired.

REP. SANDLIN: It has expired. Thank you for your comments. Thank you, Mr. Chairman.

REP. MICA: Thank you. Let me recognize Mr. Hayes.

REP. HAYES: Thank you, Mr. Chairman. I personally resent some of Congressman Filner's remarks and the implications that if a company CEO does not have collective bargaining this somehow represents a lack of concern for employees. Nothing could be farther from the truth. With all due respect, I disassociate myself with remarks of my friend and colleague Mr. Filner in this regard. As the CEO of a company, union and non-union, in the past, nobody cares more about the employees than me. And I assume you all have the same regard. So I want to make that very, very clear.

Interestingly, I don't know everybody in the audience, but a number of folks who work on the ramp at Reagan National, Signature Aviation, just came in the door, and this is real to them. Question: Will you all give us a list of suggestions after you have legally met suggestions that say what you can do working together on scheduling and other areas given reasonable protection from antitrust laws so that we can address that problem on that levels.

PANEL MEMBERS: Yes.

REP. HAYES: Everybody says yes. Number two, I spoke with Mr. Hoffa as he left. As a former CEO of a Teamsters company, and under the master freight agreement, I asked him if he would be willing to consider flexibility of work rules which translate into cost saving, also more job opportunities for others. He did not respond initially. I asked the question again, and he said he would be willing to look at that. Are you all prepared to directly -- and there are other unions involved -- this is not an anti-union statement -- anybody in the audience who wants to question me about it later, please do -- are you willing to go to a union and say, Let's be realistic, what can you do?

MR. ANDERSON: I can speak to that. We have in fact met with all the unions at Northwest Airlines from the pilots, flight attendants, mechanics and our people at the IM. And because of the exigency of the circumstances here, we weren't able to have fulsome discussions with them. But I believe that they were very forthcoming and very somber when we had to sit down with them -- Doug Skeen, the president of Northwest sat down with them yesterday and talked them through where we are, and it was a very difficult meeting for all of us. And I think that the tone and tenor of that meeting was such that we can have those kinds of discussions with our people.

MR. KELLY: The answer is yes, sir. Alaska and Horizon -- we have already responded that in fact we wouldn't go ahead unless we did have those kinds of discussions.

REP. HAYES: At this point in time I see complete cooperation on your part for burden-sharing and doing what we need to do to get the ox out of the ditch here. And until some point in the future where I see otherwise, I appreciate you being here and I appreciate your concern and participation. Thank you.

REP. LATOURETTE: Mr. Hayes, would you yield to me a little bit of your time?

REP. HAYES: I yield to Mr. LaTourette.

REP. LATOURETTE: I thank you, Mr. Hayes. I just want to follow up to Mr. Sandlin's question, because I -- and sometimes you hear things that aren't true around here. But I had been led to believe when the package was on the floor on Friday that there had been discussions between the leadership of the House and the airlines, that if relief could be -- a signal could have been sent last Friday to the markets when the markets for when the market opened that perhaps some of the layoff announcements that have come out this week were going to be delayed pending an examination of that. Did someone not tell me the truth on that?

MR. MULLIN: No, I think -- first of all, we had terrific support last week in response to the absolute crisis that we felt at that time. And there was a package that was put together that reflected essentially what I would call a three-day look at what was going on. And now we have the vast amount of time, a one-week look at what's going on, but frankly it's a lot better look than we had back then.

We were particularly grateful to the leadership of this committee in terms of pushing forward to provide that help. So it was needed then and this is needed now. And as far as we are concerned the efforts are consistent.

REP. LATOURETTE: All right, thank you very much. Thank you, Mr. Hayes.

REP. MICA: Mr. Pascrell.

REP. PASCRELL: Mr. Chairman, I would assume that each of the panelists have read Jerry Persucto's (ph) and Nelson Walsh's (ph) letter from Morgan Stanley? This is a powerful letter. One page -- talking about security and stabilization of the airlines, the access to capital -- and that's why you are here. What is your specific opinion of the letter? Is it inclusive, Mr. Mullin?

MR. MULLIN: I think it is. I mentioned earlier --

REP. PASCRELL: Speak up.

MR. MULLIN: I think it is a conclusive letter. I can certainly say it's entirely consistent with the experience I have had in just this week in terms of completing a financing that where we had kind of 100 percent assuredness before the event. And even then it had some last minute wrinkles on it. I think the likelihood of doing a EETC or equipment financing type deal moving forward without action by the federal government is virtually nonexistent. And the EETC market is what all of us are using to handle our equipment purchases moving forward.

REP. PASCRELL: Then, simply put, if we don't have an economic package soon that's a smart package, there is no way you are going to have access to the capital you need in order to survive?

MR. MULLIN: Right, absolutely.

REP. PASCRELL: Am I exaggerating that?

MR. MULLIN: No, you are not exaggerating.

REP. PASCRELL: Let's go to point two.

MR. MULLIN: Yes, sir.

REP. PASCRELL: We are talking about an $18 billion package. It's been broken down several times -- close to 18 billion. What percentage of the total operating budget this year is that?

MR. MULLIN: Well --

REP. PASCRELL: For all of you, all of the major -- all of the commercial lines.

MR. MULLIN: Well, if you take -- let's say Delta -- Delta has got about a $15 billion expense program. We represent about 17 percent of the industry. Multiply that by six -- you are talking about $100 billion of expenses.

REP. PASCRELL: So you're -- final answer?

MR. MULLIN: He said I was right. (Laughter.)

REP. PASCRELL: What I asked the question for was the proportion here algebraically of what we are talking about -- you know, we don't want to be headed -- I haven't heard that from anybody here. And we are united in trying to help. There's various ways of getting there, but we are united. We don't want to head towards nationalization --

MR. MULLIN: Absolutely not.

REP. PASCRELL: And let's make that clear --

MR. MULLIN: Absolutely.

REP. PASCRELL: That isn't what anyone is asking. Nor is anyone suggesting on this side. We have gone through during critical times in our history nationalization of certain industries in order to get by, in order to provide security. You are not suggesting that we head in that direction. You are suggesting somewhat of a nationalization of the security at the airports. Is that correct? Is that what you are saying?

MR. MULLIN: Yes, we are.

REP. PASCRELL: Let me go to the next point. Now, I, because of location, am concerned about all of you, but specifically Continental Airlines. Now, Continental Airlines has a very specific problem of liquidity, cash flow. Some airlines have that problem, some do not.

MR. MULLIN: Right.

REP. PASCRELL: And they are for various reasons. If we don't provide this package -- as a good example -- if we don't provide this action -- Continental is about eight or nine percent of the total industry --

MR. MULLIN: Correct.

REP. PASCRELL: -- Continental goes belly up October the first. Now, Mr. Chairman, this is serious business we are talking about here. Continental goes belly up, who is there to assume those responsibilities, those services to those destinations that you pointed out? Now, you have I believe -- correct me if I am wrong -- five to ten days grace period in order to come up with a payment -- Continental has a payment right now that's due of $70 million.

MR. MULLIN: It's due on Monday.

REP. PASCRELL: It's due on Monday. But from what I understand there's somewhat in negotiation -- a five- to ten-day period of negotiations. That's why I said October the 1st. I am talking very specifically, very tangibly here about a specific -- one of the great airlines, as you all represent as well. I mean, the nature of this problem is, Mr. Chairman, is that we need to act as soon as possible on a package that is acceptable. And we have worked out formulae to the acceptance of everybody concerned from what I understand. Our next step is for us to act. But I think you have heard enough from this committee to know that we are concerned about security, as a very critical aspect of this give and take.

MR. MULLIN: Yes, sir.

REP. PASCRELL: And, secondly, I would suggest to the airlines that you not simply -- not that you are doing it -- but you not just dismiss the employee side of this, the rank and file, in terms of benefits, in terms of severance, in terms of health benefits that these families need, which are critical -- just as critical to the economy I might add in the long run.

REP. MICA: The time of the gentleman has expired.

MR. MULLIN: May I have a response?

REP. MICA: I'll allow a brief response.

MR. MULLIN: I would just like to say -- and I think I echo -- but I'll just speak from Delta's perspective. There is nothing more important than our employees to Delta. The employees are Delta. And if some of these employees are laid off, for hopefully a short period of time, we want them back, and we want them back to be enthusiastic representatives of our company. They are our company. We want to treat them very well. We will treat them as best we possibly can.

REP. MICA: I thank the gentleman. We did attempt to act immediately last Friday night and Saturday morning. Let me recognize Mr. Simmons.

REP. SIMMONS: Thank you, Mr. Chairman. I have some questions, but I'd like to yield a few seconds to my colleague Mr. Hayes.

REP. HAYES: I failed to mention I think there has never been a safer time in American history to fly on the commercial airlines. The danger is in the trip to the airport still.

REP. SIMMONS: Thank you, Mr. Chairman. I agree with that assessment. I have been flying three of the last five days, and I have never felt safer actually. People are going through parts of my baggage that they have never gone through before, but I won't get into that.

I mentioned earlier that a member of my family is part of the airline family. But I want to put up a couple of difficult questions that derive from the Wall Street Journal article this morning, entitled, "No Time To Bail." I don't know whether you gentleman have seen it or not, but, briefly, it says the rush to bail out the airlines, at least as currently envisioned, is not one of those right things. Simply put, bailing out the airline industry is like trying to bail out the business cycle. It can't be done.

They go on to say that there are some things that the federal government should address, such as nit-picking airline mergers -- that the federal government should be more relaxed about airline mergers -- maybe that's a natural way that the industry could be self-supporting; that the in the area of security the federal government should assume responsibility for airline security because they are better at police power and public safety as a government duty -- national defense is a government duty obviously. And then, finally, providing some sort of immunization to the air carriers from tort warriors or tort -- the legal profession -- perhaps on a one-time basis or for a certain period of time. We have talked a lot about cash grants and loans and dollar instruments. I would like you to comment a little bit on two of the three items that are raised by this article.

Can you bail out an industry, and are there other governmental things we should be addressing other than money to try to strengthen our position over the next six months?

MR. MULLIN: This is not a bail-out. This has not resemblance whatsoever to any past circumstance that has occurred.

REP. SIMMONS: It's their terms, that's all.

MR. MULLIN: I understand. This is -- and I did read the article this morning. I mean, in many respects none of us would want to call for the nationalization of our industry -- we have already stated that. This derives from this tragic event of September 11th wherein airplanes of this industry were used as lethal weapons in the consummation of this terrible situation. That's what brings us here today. There is no comparable situation in American history. And therefore in that Wall Street Journal article, which I read myself this morning, I found that they must have been talking about something that was on some other planet. It doesn't pertain to this situation. This is not a business cycle problem. It is derived from that tragedy.

And relative to the other issues, such as the use of mergers, we have made a firm recommendation to ourselves not to introduce any other public policy dimension into the equation for this particular instance. What we are here today -- is to talk about consequences that are associated with the September 11th tragedy and its consequences on our industry. Hence, we have purposely said we don't want to talk about changes in merger acquisition policy or labor laws or passenger service plans or any of the other issues that confront our industry in which there may be differing opinions. This is a unique way in a laser-like fashion -- it is related to the tragic events of September 11th and the consequences of our industry and our capacity to restore our capacity to serve, and serve the economy moving forward. That's what we are about.

REP. SIMMONS: If I could just follow up very briefly, I understand what you are saying about the laser-like approach, but if there are other administrative and oversight recommendations that could be implemented that have beneficial effects and don't have the same cost to the taxpayer, why would we not want to consider those?

MR. MULLIN: You should consider them, but I think not as a matter of this proceeding, per se. I mean, we are here for a specific purpose relating to the consequences -- this financial package is related to that. We would be very, very happy -- and it is appropriate to have discussions of those. I mean, I find myself agreeing, by the way, with the merger statement that was in the Wall Street Journal. I do agree with it. But that's not what we are about here today. We are here to talk about the consequences that stem from the September 11th tragedy.

REP. MICA: The gentleman yields back the balance of his time. Ms. Boswell.

REP. BOSWELL: Thank you, Mr. Chairman. I -- in opening remarks we were short, but I referred to all of you as generals. And you are, and I am proud of you.

MR. MULLIN: Thank you.

MR. : Thank you.

REP. BOSWELL: Very much so. I watched your nodding, and I mentioned employees like the DCA folks moved in, or Mr. Hoffa, they are your troops, and you understand it. I just wanted to make that point, and I am proud of you.

A couple of comments, statements and a question. We have to protect the pilots, the crew -- we have to protect everybody. But the pilot -- that man or woman that is up there in the cockpit, they're the ones that are going to place that airplane on the ground. You know that, I know that. But we have got to protect them better, and we are going to do that -- I have no doubt.

And I don't see this as a bail-out. Don't be -- this is not bail-out. The events that happened on September 11th -- we through our FAA, but for a good cause, stopped you. And it has been and is very costly, and that's what you are here to deal about. We want to keep you going.

Now, I am hearing over and over and over security, security, security. I very much associate myself with the previous chair, Mr. Chairman, Mr. Duncan, about the things we have got to get done. I don't quite -- I think we can incorporate this in this thing today. I am willing to stay here all night long. But you are too. We can work awhile, come back with a draft -- do whatever we have to do -- spin it up a little bit, go back, work awhile, come back to the second draft and fix it. But I think security is as urgent as the financial part. It's urgent. And you've said that extremely well, all of you, Mr. Mullin, you've led -- urgent -- it's absolutely urgent.

I made a comment -- it was interesting, and you may want to refer to it. Mr. Chairman, I may give it to you for tomorrow or Friday. I was quite taken with the police officers that called this morning from my capital city Des Moines and said we would give our time, our off time -- and we are pretty well trained, but to give you encouragement, maybe just take those of us who have five years experience, or went through certain academy courses, or however you want to do that. But we are trained. We are tech people -- we might need some additional training for a day or something -- but they are willing to step in and be sky marshals. I'll bet that would be across the country if we checked it out -- no compensation. He said, Well, if the airlines don't have full seats, they might want to give us a ticket for riding somewhere, but I'll bet you you wouldn't have no trouble with that. And so I hope we will look at that as something -- again, the urgency to give comfort to the public. And that would help a lot.

The question that I'd like for you to refer to that Mr. De Fazio asked about your purchases -- things are pending. You didn't get a chance to answer -- ran out of time.

And I would like for you to answer that, so do that in a moment here. I think we've got a couple of minutes yet.

Again, Mr. Chairman, more in statement, general aviation has taken a hit too, here, just absolutely so, the fixed-base operators and so on.

And I don't know if anybody heard me that, you know, I fly a little Piper Comanche regularly. And I file IFR, I file VFR, I don't file. Depends how far I'm going, where I'm going.

There's nothing would have stopped me or somebody that flies small aircraft or went to their airplane over these last few days, got in it, and flew somewhere and rammed it into something. And we're not going to be able to stop that. So why we are we putting this burden -- it's accomplishing that I can see, and I want to participate in that argument, if there is an argument, because then why we are putting this financial stress on these -- this entity, where they're not selling any fuel, there's not any training going on, and so and so on -- with lots to be said.

But we can pass something tomorrow -- back to the point -- if we just knuckle down and get on with it.

Can you respond to Mr. DeFazio's question about purchasing?

MR. : Could you frame the question for me?

REP. BOSWELL: Well, he said that you probably got orders and would be cancelling some.

MR. : Yes.

REP. BOSWELL: Would you considering cancelling the foreign market orders versus those that are purchases that are being made with American industries and so on? "Buy American," I guess, is what he was referring to.

MR. ANDERSON: Well, in all due respect, Congressman, it wouldn't be appropriate for us to do that. At Northwest Airlines, we're one of the largest operator of Boeing airplanes in the world, and we are one of the largest operators of Airbus airplanes in the world. And we've made firm commitments.

And by the way, those Airbus airplanes all have Pratt and Whitney and General Electric engines in them. So the day that I cancel an order for an Airbus A320, I've just cancelled two engine orders for General Electric and a wheel and brake order for B.F. Goodrich and an avionics order for Honeywell. So the complexities that are involved in who makes all the components for airplanes are much more complex that just saying Boeing or Airbus.

And second, we gave our word, and we signed a contract. And those -- and I'll say it here -- both make very good airplanes. So I don't think it would be in our best interest --

REP. BOSWELL: Reclaiming my time. It was a great answer. And what's the -- Mr. Oberstar, what's --

REP. YOUNG: The gentleman's time has --

REP. BOSWELL: What?

REP. YOUNG: The gentleman's time has expired.

REP. BOSWELL: I'll stop. (Laughter.)

REP. YOUNG: (Off mike.) I'm going to recognize Mr. Rogers.

REP. MIKE ROGERS (R-MI): Thank you, Mr. Chairman. And I thank you, gentlemen, for being here for a long period of time, when I know there are a great many things that you can be doing back at your companies.

A couple of concerns:

There were some arrests in Detroit last night, and they found IDs and information that would lead to believe that they had access to some of the services at the airport. And I happened to be in a town hall last night where that came up again and again and again.

And we've heard about all of the security measures that we have done for passengers, and as someone who's flown on Northwest Airlines several times since last week -- and I feel very safe doing that -- what is being done to increase the accountability and the security for the services provided?

MR. ANDERSON: As part of the security regulations that we worked with the FAA on around the clock last week, we included several new security directives with respect to access to the airport operating area. Airports were directed to cut down the number of entrances to the AOA.

We have regular pat-down and search -- AOA, airport operating area -- we're stuck with a lot of acronyms.

We have pat-down searches and random access, our searches of employees on a random basis -- all the people that have access to the ramp. We're requiring identification when employees come into AOA. Instead of just a normal stripe, you have a guard present who is verifying IDs.

And I would say those immediate steps have been taken. But in the longer term, the task force that Secretary Mineta has put together -- and it's really not long-term, it's in the next two weeks -- I think one of the really big issues that we have to deal with is third-party vendors on the airport -- fueling vendors, catering vendors -- and the access that they have to the airport. And I think that should be a significant issue that we address in the context of Secretary Mineta's task force.

REP. ROGERS: Thank you. Next question. And first of all, as -- I have had the privilege of owning a small company and the great agony of owning a small company. And I heard my colleagues on the other side of the aisle talk about taking care of your employees. And I can't tell you -- we would have not functioned were it not for our employees. That is the last thing that we want to ignore in the process. I know you are in the same phase. You can't run a good airline without good people.

MR. ANDERSON (?): It's your most important asset.

REP. ROGERS: Absolutely.

The other concern I have is, I've noticed the different cash flows, and there's a wide variety -- I think from a high of 90 days to a low of about 20 days, if my information is accurate.

MR. KELLY: It's a high of 110 days. We were just not included in Alaska Airlines, -- but we actually have longer than anyone.

MR. ROGERS: So you don't need nearly as much money, is that what you're telling the committee? (Laughter.)

MR. : We'll take his share!

MR. KELLY: I wouldn't say that. That we would have to justify each of our levels.

REP. ROGERS: My concern is -- and I have been on those airplanes as well, and there is just hardly anyone on them. How are we going to gauge the fact that we're going to give these grants and that we could make that last until we get the confidence back in the American public to get back on these airplanes? That is my concern. We can promise you loan guarantees; we can promise you we're going to take the cost of security; we can do all of those things. We give you this shot in the arm. How do we fill the gap here? That is my greatest concern. Especially with companies with short-term cash flows -- 20 days, 18 days.

MR. MULLIN: Well, I think the key element of the $5 billion -- make no bones about it, that $5 billion is needed like, now, particularly for a set of our colleague airlines that we've mentioned earlier that are really close to terribly financial duress.

And then, it's our belief, in terms of the projections that we've made, that this $17.5 billion program, with the two parts, $5 billion now and the $12.5 billion loan guarantee program, will allow us to make it there. Now, we're using optimistic assumptions for ourselves to impose the demand that we really work hard to carry out our share of the bargain here. But hopefully by the second quarter of next year, under these projections, you know, we'd be there. And so that's what this program will do, it will get there -- we hope.

REP. ROGERS: Just more of a comment on the last. Again in this town hall meeting, there were several folks who were there who earn their living -- they were travel agents, booking agents -- and they had a very interesting perspective. And I certainly appreciate the concern of my colleagues, but they said, quite clearly, last night, they said, you know, we're going to be fine if you can just get the airlines flying lots of planes again. I think that ought to be our focus here.

We can help those folks by helping you, and we ought to get on with the business at hand.

MR. MULLIN: It's a classic case of a derived business that we're talking about, and hence it underpins exactly the reason that we're here. So much of the economy depends on the airlines.

REP. ROGERS: Again, as an automotive state, that just-in-time manufacturing counts on the airline industry to keep those factories open. The ripple effect of this is tremendous. And we ought to get about the business at hand.

Thank you, Mr. Chairman.

REP. YOUNG: Thank you very much.

The chair recognizes Mr. Baldacci.

REP. JOHN BALDACCI (D-MO): Thank you very much, Mr. Chairman.

I certainly would like to echo the comments that were made earlier. As our nation rebounds from last week's disaster, we must do everything possible to ensure a strong economy. And no industry has been so uniquely and strongly affected by the terrorist attacks as the airline industry and its related sectors.

I think it's also helpful as we go through this process to just be able to go through and ask some of the particular questions that have been raised, to make sure as we move forward with this package that we've done our due diligence. One of the things that has concerned me is the ripple impact in the relationship between regional airlines. I left this morning on Delta, and service was wonderful, got there on time. The plane was pretty full when it left Bangor, Maine.

MR. MULLIN: That's good news.

REP. BALDACCI: There were only two seats that were available at that time. So that was good. There was confidence back in. But then I started thinking, well, what about the ripple impact, about going to the hubs and then not having the airline service at that point, and what does that do to the regional economy and the relationship back and forth. And what are your plans in terms of those integrations?

MR. MULLIN: Well, you're pointing out a fundamental. I mean, the regional economies are inextricably linked to the hubs. Delta, for example, in just even our connection carriers, our regional jets receives over $2 billion of its $15 billion or so revenue from those small communities served by those connection carriers. So to the extent that we continue to have difficulty, that ripple effect into the small communities will go beyond just the cessation here; it will absolutely affect the service equation throughout all of America, and I think especially into the smaller communities.

REP. BALDACCI: One of the other things that is a concern was raised earlier, was the confidence and the consumer. And, you know, I spoke to a roomful of people last night and there was a lot of uneasiness about flying again. And we've all flown in order to get back and forth. What are the programs? I heard fare discounts, but have you got a program in mind to be able to go back to people and suggest, okay, it's now time to fly?

MR. MULLIN: We absolutely will be doing those programs. But I think, to quote Richard Anderson just earlier -- he said it eloquently -- there's absolutely nothing that could be better to restore our marketplace than the absolute confidence that people would place in our industry, most especially with respect to safety and security, which we welcome the opportunity to say over and over again how primary that is in terms of our objective; but secondly, in terms of our financial stability and our ability to perform.

People have to have confidence in this industry. So just through the kind of hearing we're having today, the kind of support we hope we will get from you, and the continuing roll-out and implementation of the safety program that has been already defined, and will be further defined through Secretary Mineta's committee report in two weeks -- Richard Anderson is a member of that committee -- I think all of that will create a sense of confidence.

But I think that what we will be doing is pushing the message over and over again; it's much more than marketing programs, it is: This industry is safe. Prior to this accident, nothing was safer in transportation. And now we have taken steps to even make it more safe, in light of the terrorist actions that have been taken.

REP. BALDACCI: You know, I don't know where it's all going to end, but I know that we were attacked, and I know that it was very unsettling. And I know it's very important for all of us to roll up our sleeves and get America back to work. And part of that is getting the airline industry, which has a tremendous impact. I mean, they were telling me just at Reagan National the impact there was 10,000 jobs. And when that shut down, the impact that that has on those families and families that they do business with, and in terms of service and other types of related jobs that are affected by those jobs. So we're all interrelated here, and the stronger that we are as a country, and the sooner we can get the airline industry and the other affected industries back, then it's going to be better for America.

I would just like to say that in terms of airline security, I do think that we do need to have a federalization of that program. I think we do need to have uniformity. I was a little bit concerned that different airlines have different procedures and are given different latitudes. And I do think we need to have uniformity. And I would be in favor of advancing that and having the federal government having that responsibility also, and being assumed at the federal level. I think the people would feel much more comfortable also if those efforts, along with sky marshals, and other check-ins and security measures that are taken would be helpful. And I look forward to working with the industry as we try to build back our economy and get our country back on its feet again.

Thank you very much, Mr. Chairman. I yield back.

REP. YOUNG: Thank you very much for your observations.

You know, an informal survey at the beginning of this hearing -- and this is the largest committee in the Congress, and we had near full attendance -- just about every member had traveled over the weekend. I know I did, and others have too. And they've related their experience. And I think most of us have a great deal more confidence in the security checks and everything that are going on. So we're trying to be part of the solution and not a perpetuator of the problem.

The chair recognizes Mr. Kerns.

REP. BRIAN KERNS (R-IN): Thank you, Mr. Chairman.

And as this is my first opportunity to address you folks today, let me first say my deepest sympathy to you, Mr. Horton, and American Airlines and all those impacted by this terrible tragedy.

MR. HORTON: Thank you.

REP. KERNS: I was delayed earlier by a delay in my flight schedule, as many Americans have been recently, and understandably. Let me ask you this, and it's a question I've been asked back home in Indiana, is how quickly and financially this tragedy impacted the airlines industry. What do you see going forward, if we have another catastrophic emergency or something impact the industry that we don't have a similar financial meltdown, if you will, over the short period of time? And -- because I don't know if this country can once again put this kind of money forward if we continue to have this type of thing happen, or something similar, recognizing that we're certainly going to address the safety aspect.

MR. MULLIN: I guess I would have to begin with the observation that we truly hope that we never have a circumstance like this again. We've never had it in our history so far until the tragedy of September 11th. And so we're not giving -- we just will hope and pray but do everything. So sort of praise-the-Lord-and-pass-the- ammunition-type thing, you know? We're going to work our tail off to make sure that we do everything we possibly can to ensure that everything is safe and secure. And certainly we stand in admiration of the steps being taken by the federal government in an intelligence sense to ensure that these perpetrators or their colleagues never are permitted to commit an act like this again. And so we're proceeding with that assumption and attempting to earn back the confidence of America. And I think with all of the safety and security steps that have been taken, I think the American public has every reason to believe that flying will be safe and secure.

REP. KERNS: I've heard a number of statements indicating that security measures have been increase and that it is, in fact, safer to fly today than it was just a few days ago. Are you prepared to say today that it is safe for the American public to fly?

MR. MULLIN: Absolutely.

MR. : Absolutely.

MR. : Absolutely, positively.

MR. : Absolutely.

REP. KERNS: Okay. Let me suggest that anything we do financially to support the airlines industry, and we want to -- we do not want to have a collapse of the industry, as we recognize the importance of it to the U.S. economy -- that security measures and increased security measures be tied to any financial package we do to assist the airlines industry. I've traveled just recently back home to my district, and then, of course, back here today to be with you, and I've noticed an increase in security and diligence on the part of the airlines industry, those at the airports and elsewhere. But I can also say that I can see room for improvement. Some things that I witnessed and experienced over a period of time at other airports are now being implemented here, for example, at Dulles Airport. So I think standardization and working together like we are here today I think could benefit the American people and all of us as a whole.

MR. MULLIN: Thank you.

REP. KERNS: And with that, if you have any comments, please feel free to make them.

With that, Mr. Chairman, I'll yield back the balance of my time.

REP. YOUNG: Anyone?

MR. MULLIN: I -- I would --

REP. YOUNG: Mr. Mullin?

MR. MULLIN: I think the comments are -- we agree with them. Through the committee that the secretary has established we feel like we came right out of the blocks with an absolutely terrific improvement in security developed jointly by the government and industry. That's in the process of being implemented now. Other follow-on subjects such as the improvements to the cabin door and so forth that -- will be considered as part of this. The questions of who's paying for it, we've implemented these without any question of who's paying for it yet. But we're just moving ahead with it. So I think I would just associate myself with your remarks and know that we have to continue to improve it.

REP. KERNS: Thank you.

REP. YOUNG: Thank you very much Mr. Kerns.

The chair recognizes for five minutes Mr. Carson.

REP. BRAD CARSON (D-OK): Thank you so much for being here today, and the marathon is almost over by the time you get down to where I am sitting. (Laughter.) Just a couple of questions for you.

First of all, much has been made about the possibility of draconian layoffs and cutting back airline orders and issues like that. I think one of the sources of confusion is that the bailout, to use a term I know that you don't like, but that the public would use, is supposed to put you to the status quo ante, back to where you were before the airlines hit the World Trade Center. And the models you project to talk about cost through the fourth quarter of next year discuss those kind of things. But I think that's why a lot of people are confused about that, and that is your models say your losses will be between $18 million -- or, $18-$33 billion over the next 12 months. The question is, would that put you back into how you were on September 10th, and if so, why, to follow up on Mr. LaTourette's question, is it that if the airlines are put back into the status quo ante, do all of your derived businesses from that, from travel agents to the peanut suppliers in Ohio, bear much of the problem?

MR. ANDERSON: As a number of congressmen and then senators pointed out to me yesterday in various visits, that we will probably never return to the status quo in this country after what happened last Tuesday.

We have an estimate of what the impact will be to the industry. But that estimate is an estimate that's based upon a projection of where revenues are going to go in our industry. And as Leo Mullin stated in a very articulate way, we picked a very conservative case in terms of what we're asking you to help us do. And there is still a big hurdle that we have to undertake internally. And because of the lack of demand, we really aren't returning to the status quo of last Monday. And candidly, I don't think we ever can, given the dramatic change I think that it's wrought on our country.

REP. CARSON: I guess my question, though, is what I think people are confused about and raising concerns about is it seems in the model you're offering us, costs are static over the next 12 months -- or I should say are dynamic over the next 12 months, because in your mind you're going to be cutting costs, all kind of layoffs and things like that, but in the model they seem static. And that is you're projecting what costs are on September 10th, projecting those out over the next year, and then laying those up against declining revenues and coming up with this $18 billion figure, when in fact, costs are going to be declining quite dramatically as well, if these catastrophic layoffs occur, if there are declining orders for aircrafts and all the other costs as well.

So my question is, can you tell us what you project cost to be? You have a projected burn rate on September 10th. What are the costs expected to be, and how do those line up with the revenues? And does your model make all of that come out between $18 billion and $33 billion?

MR. MULLIN: Well, I'd just say that the base case that we have used is the one that generated the projection of the $24 billion need. And then, with a much lesser probability, an optimistic revenue projection, it would have produced the $18 billion need. Now, what we're -- basically, implicit in the challenge that we're presuming here is there is the challenge of taking on that revenue cost equation, howsoever it turns out during that time period. And so there will have to be a considerable -- a reduction in costs, even if we were able to operate within the $18 billion, given that the $24 billion is the base. So that's the --

REP. CARSON: Would it be possible for you to give me and other members of the committee kind of the model that you're using, projecting those kind of costs as well?

MR. MULLIN: Sure. Yeah, we'll be happy to go through the detailed calculations with -- provide our staff assistance to staff on the committee, or whatever, to help do that, or to you.

MR. KELLY: I would also like to point out, if I might, Congressman, that we're really talking about 19 days, $5 billion. That does not cover the time frame forward. Going forward, what we're asking for is the ability to have loan guarantees, loans that will be repaid. We are going to be suffering mightily after this point in time. We will be taking every degree of self-help we can to stem the losses. But all we're asking is that we can have those loan guarantees so we can have the liquidity to continue operating and get passengers back flying as soon as they can, because that will be in everyone's best interest.

REP. CARSON: Let me ask a question to the representative of America West. I understand that American Airlines and United are very concerned about the potential liability on the ground from what happened last week. And much has been made about how the capital markets are drying up until it's proven what those liabilities are and if they exceed possible assets of the respective corporations.

Is that a concern for you as well in that sense -- I mean, are the capital markets drying up for you because of potential liabilities that American or United Might be facing?

MR. PARKER: Well, to answer your first question, is it a concern -- absolutely, for similar reasons. The fact of the matter is, capital markets have dried up for America West and like airlines. Not so much because -- actually, it's hard for me to say which happened first. But the fact is, they've dried up largely because of the liquidity situation and the future revenue projections that are out there. So that first and foremost is what caused our financing to fall apart. But having said that, we share with American and United, concern about the liability issues, because once we do get -- I don't think you can really have stabilization until that issue is taken care of as well.

REP. CARSON: Let me ask, then, one final question, to anyone on the panel. I know much of the resistance from the airline industry about more money and security procedures or sky marshals or various proposals like that -- the war-risk insurance -- is the elasticity of demand, when you raise the prices that are passed along to the passengers. Tell me if that's a correct analysis of what the resistance from the industry is, and what the estimated elasticity of demand is in the airline industry.

Do you want to --

MR. ANDERSON: I'll do it

REP. CARSON: Go ahead.

MR. ANDERSON: When customers buy our tickets, they buy our tickets on the total purchase price, and there are a lot of add-ons. And so if you advertise at $99, and then you have PFCs, customs charges, whatever else goes in -- our demand curve is based upon the total ticket price, including all the add-ons that go on the ticket. Because when a passenger prices a ticket, they make their buying decision based upon the total purchase price.

MR. CARSON: Right. But your ability to pass it along depends upon the elasticity there. What is that in the airline industry? I mean, when are people going to go off to take a bus or a --

MR. ANDERSON: Well, it varies by market, and it varies by passenger, and it varies by economic conditions. And in fact, we manage that by day, by flight, by market, in about 12 different fare types. So it is a much more complex equation than to think that you can vary it. But I can tell you that if you talk to any pricer in the airline industry, they will all tell you that when you add that onto the ticket, it impacts elasticity, absolutely.

REP. YOUNG: The gentleman's time is expired.

The chair recognizes for five minutes Mr. Rehberg.

REP. REHBERG: Thank you, Mr. Chairman.

As a testament to the new security provisions at Dulles, on Friday they even took my mustache scissors, so -- (laughter) -- we know it's working out there.

When you represent an entire state like I do, the state of Montana, the greatest population of any district, I get asked the question a lot, you know, why do you pick the committees that you're on? And I always answer the question, I want to represent those that are most vulnerable within my state or my district. And never did I think that the airline industry would be one of the more vulnerable constituencies that I've got.

I guess my question is even more narrow than your own company, and that is essential air service. Can you explain to me -- does this bill and the financial package that you have put together adequately represent those that are -- not necessarily your company, but partners of yours? And specifically, Mr. Parker, I know that you were most recently up in Montana signing a contract with Big Sky Airlines -- Mr. Mullin, Mr. Anderson. And when you cancel particular flights -- as we know has occurred already in the state of Montana, the one that I take in particular -- it affects essential air service.

Can you explain to me or can you qualify my concern that essential air service isn't going to be the biggest loser?

MR. ANDERSON: Well, as to your question as to the formula, all of the carriers have agreed, including the Regional Carrier Association and the -- Ed Faberman's (sp) group and the charter group, that the fairest allocation of the funds that we're asking you here today for is through ASMs. So it has an equal impact from American Airlines to Big Sky Airlines in terms of the availability of benefits.

REP. REHBERG: Except that the ability to pass on additional costs -- we'll use fuel as an example. As the price of aviation fuel was going up, under the essential air service contract, Big Sky Airlines was not able to pass along that cost in the cost of their ticket. And so there's, it seems to me, an indirect additional cost to those that provide essential air that wouldn't be covered under this proposal.

MR. ANDERSON: Well, they take as a carrier, just as Northwest takes as a carrier with its other commuter subsidiaries, under the formula, and the passing on of fuel prices is the same whether you're American Airlines or Big Sky Airlines. So the bottom line is I think the formula that we've provided for allocation of the grant and the loan guarantees is a formula that treats everyone equally based on size.

Now, your questions with respect to essential air service, I think, are legitimate questions. And I think the whole issue of our essential air service program in the United States is an issue that should be revisited.

REP. REHBERG: So Mr. Mullin or Mr. Parker, are they adequately considered within your proposal, from your perspective, or should we have some additional separate or earmarked support for regional carriers or those that provide essential air?

MR. MULLIN: In my opinion, they probably deserve more consideration. I think that there's no question that as we go through our own -- look at our routes where we fly, that those thinly populated routes which don't generate much traffic tend to be questionable. I think that the offset to it continues to be the continued infusion into the marketplace of the regional jet. This is a technological innovation that really wasn't there five years ago. And we are -- most of us are taking very large orders of those, which, from my standpoint, while we might have to go back and talk to some of the large manufacturers, like Boeing or Airbus, I would not conceive that we would be stopping our flow of regional jets. And they are uniquely tailored to serving the kind of market that you're discussing. And we at Delta into Montana have had a program going with Sky West, particularly, to continue to develop and cause that to flourish.

So I think it's not -- the direct answer to your question is we're not down to the level of detail where I could give you a firm answer that that has been adequately considered. I think from your standpoint in Montana, it is something that you should be concerned about. We'd be happy to work with you on it. And you have at least some hope, I think, with the regional jet around, that somehow we can work out something here.

REP. REHBERG: Mr. Parker?

MR. PARKER: I agree.

REP. REHBERG: And I apologize; I don't know if Alaska Air --

MR. KELLY: Alaska Airlines, Alaska Air Group owns Horizon Air. So when I sit here, I'm speaking for both entities. And I would agree with Mr. Mullin that, you know, in terms of the formula, that works fine for all of us. We all agree, and all the regionals that we represent agree to that. The other side of the equation that Mr. Mullin was talking about is one where the regional carriers are going to be hit even harder than we are, proportionately.

Now, we fly in markets because we want to fly there. I mean, these are cities we want to serve, and we want to maintain the service. And the question is going to be revenue expense. And that's something we're going to have to look at.

REP. REHBERG: Thank you, Mr. Chairman.

REP. YOUNG: Thank you.

Mr. Kennedy.

REP. MARK KENNEDY (R-MN): Yes. And thank you for your 4-1/2 hours with us. And I'd like you to pass on our appreciation to your employees. You know, nobody flies more than your pilots and your flight attendants. And their confidence in coming back to fly has really inspired us all. So we have to thank them.

And I'm happy to report to Mr. Anderson that my plane was over two-thirds full coming back from Minneapolis.

MR. ANDERSON: Thank you.

REP. KENNEDY: As a businessman who has a high degree of faith in the marketplace, I'm not usually anxious to look at whether or not we should be supporting private industry. But we as a government did ask you to shut down and stay shut down for four days, and, you know, this deserves our attention. And I, too, would echo how important the airline industry is to all businesses, big and small, and not just in the travel and hospitality. And for the days that I was home, I clearly heard that.

I'd like to ask a couple questions, though, about the guarantee itself. And first of all, what kind of term do you expect that guarantee to be having?

MR. MULLIN: We haven't really worked that out. We've been talking about, as its fundamental terms, sort of a 10-year term with a market-based rate of interest as being the fundamental components.

REP. KENNEDY: So you would see this as having a 10-year term, and once that debt would expire, then the guarantee would roll away and not be renewed.

MR. MULLIN: Yeah. I don't think we've gone much beyond that in terms of -- and I think this is one that we would have to work out with the federal government. I know the Department of Transportation has got some serious concerns with respect to design as to how this would work. And we heard some questions from Ms. Tauscher, I guess, Congressman Tauscher, on the subject of what form this would take. I mean, we're into a complicated design topic which we need to get resolved. But I think that for our immediate purposes here, if we knew we were going forward with the $12.5 billion loan program, I don't think it would take a long time to deal with these design issues, but we still have yet to do those.

REP. KENNEDY: So if in a best-case scenario, your loss was $17.5 billion, or incremental loss, we're really reimbursing you for $5 billion of that but helping you spread or finance the other 12.5 over a 10-year period of time.

MR. MULLIN: Yes. With the obligation to pay that back.

REP. KENNEDY: And as a former chief financial officer, my job was always to worry about the worst-case scenario.

MR. MULLIN: Yes.

REP. KENNEDY: And I know you're just asking for numbers that reflect the best-case scenario, but given that that base-case scenario or worst-case scenario is still possible, would this be better off if it were a 50 percent of the loan or 75 percent of the loan guarantee so that it could cover the base-case or worst-case scenarios?

MR. MULLIN: Well, there are a series of ways to handle a best case and worst case. Some of you may know that I spent five years with Conrail, so I actually have had experience with a situation that stemmed from the disaster of the Northeast railroads in the 1970s. And we went through a similar kind of financing deliberation as we're having here. And I remember the secretary of Transportation at the time asking us to take the approach that we have done here, which is to stretch ourselves with respect to it, which is what we've come back and asked you when we used our so-called "optimistic assumptions." Another way of saying that is we are stretching ourselves.

Now, I think everybody in this -- I haven't heard a single congressperson in this session say that air service is not essential and vital to our economy. So we're going to do our darnedest to get through this and live within the financial parameters that we have outlined today. But in Conrail's case, actually we had to come back once. And if we had to, we'll come back. But we sure would want to avoid that if we possibly could.

REP. KENNEDY: All right. Well, we thank you for your testimony today, and we'll look forward to making sure that we keep that essential airline flying. Thank you.

REP. YOUNG: Thank you, Mr. Kennedy.

The chair recognizes Mr. Oberstar for closing comments.

We're getting near the end, gentlemen.

REP. JAMES L. OBERSTAR (D-MN): Thank you very much, Mr. Chairman. I first want to say that the ranking member of the subcommittee on Aviation, Mr. Lipinski, was unable to be here today due to family obligations, and very, very regretful that he can't be here.

Second, although Fred Smith has left, I just want to say his presence at the table is the longest period of observed silence from Fred Smith in my memory. (Laughter.)

MR. MULLIN: We had to work on that. (Laughter.)

MR./REP. : That's probably why he left.

REP. YOUNG: He was excused,

REP. OBERSTAR: The response to the question raised by Mr. Boswell about general aviation, the ground stop order on general aviation will keep law abiding pilots on the ground; it doesn't do much for anything else.

Security can't wait for separate action. It must be a part of this package. And we have to have our staff working on putting those two together.

Costs have been raised, and I don't think that Mr. Kelly's response was comprehensive. Early on I asked whether declining expenses were included in your projections of the $17 billion -- or, $12-1/2 billion of losses subsequent to September 30. I just wanted to clarify that, in fact, you have calculated declining expenses due to declining service in those estimates.

REP. BOEHLERT (?): That was Mr. Mullin's response.

REP. OBERSTAR: Is that correct, Mr. Mullin?

MR. MULLIN: Yeah. We have -- in the estimates that we have given you here of the 17.5 billion, we have presumed a steady state- type of operation as it pertained to the prior to September 11th. That's what generated the 24 billion. And so, in effect, the further cost reductions are associated with going to the $18 billion-type number. We are going to have to engage in a substantial cost reduction program to operate within those so-called optimistic assumptions.

REP. BOEHLERT: The chair thought that that was brought to bear when you responded to Mr. Carson.

MR. MULLIN: Yes. Yes, sir.

REP. BOEHLERT: You're absolutely right.

REP. OBERSTAR: But there were other questions -- other responses, I thought, were not --

The issue of executive compensation has been raised and has also made a Wall Street Journal story. Now, I would -- I know from my recollection that early this year, this spring, when Mr. Anderson and Mr. Steamland (sp) were promoted to CEO and president, respectively, they gave up or deferred pay increases in base salary until a management team would review and make recommendations next year. There was already a payroll reduction plan in place. But because there is a perception -- and I appreciate the answer that you've given, Mr. Mullin, and others, about your -- I think that we may face some limitation on compensation in order to put this package together, and that there might be some language that would limit pay of -- or, limit executive compensation to the 12-month period preceding September 11, and limit severance pay or other benefits that would exceed some factor of that basic compensation.

MR. MULLIN: Well, I'd say -- I mean, certainly we're -- we would talk to you about whatever kinds of terms and conditions you would want. But that -- given that most of us operate on incentive compensation, I mean, obviously, it's going to be a wipe out. So by that comparison --

REP. BOEHLERT (?): You mean less than that.

REP. OBERSTAR: Yes, you've already made that clear.

MR. MULLIN: Yeah. Yeah. We're going to be bearing with a considerable amount of pain. And I would expect adjustments to take place as well, sir.

REP. OBERSTAR: I would also observe, however, that in the Chrysler package there was a proposal for an employee pay freeze. That was 300,000 employees. And it was rejected both in editorial comments and in legislative consideration by the Congress in 1979. I served here then, and I recall it very well.

One final thought. Chrysler had 300,000 employees at risk in 1979. Had the Congress not come to the rescue of Chrysler, it was estimated that the layoffs would have increased the unemployment rate 1 full percentage point in 1979 -- 300,000 employees. We have 1,200,000 airline employees, probably another 800,000 to 1,000,000 airport employees. If the industry goes into financial liquidation, I would envision unemployment going up 2 to 2-1/2 points, with the result being drawdown of unemployment insurance payments, reductions in Social Security and Medicare payments into those trust funds, and the outlays that would be required for disability compensation and employee severance costs that would -- and, of course, the reduced ability of employees to make purchases in the economy, would put the national economy into a tailspin.

MR. MULLIN: I think you're -- I think you're -- I don't know how much study you put onto that, but I would agree with the general thrust of your remarks. I would only add what Mr. Isakson had said in terms of those tax payments. I think that's the only element that you missed in your statement there. And the consequences are critical.

REP. OBERSTAR: Well, the industry is already putting some $20 billion in taxes into our system. I observed that earlier today.

Thank you very much.

Thank you, Mr. Chairman.

I appreciate your testimonies today.

MR. MULLIN: Thank you very much, Mr. Oberstar.

REP. OBERSTAR: We'll continue to walk with you on this, and with the executive branch, and hope that we can have a package on the floor by week end.

MR. MULLIN: Thank you.

REP. MICA: Let me yield to Mr. Boehlert for one quick question.

REP. BOEHLERT: I just want to thank all of the witnesses for your testimony today. You may consider -- some people may consider it unusual for somebody to thank someone for asking them for billions and billions of dollars -- (laughter) -- but you're doing very important work. And the professionalism that was evident in your testimony, were not making a lot of emotional arguments, were very pragmatic. We're dealing with this in a forthright manner. And I want to say to all of you, we thank you for serving as a resource to this committee.

MR. : Thank you, sir. Appreciate it.

MR. : Thank you.

MR. : Appreciate it.

REP. MICA: Well, I want to thank each of our panelists. Our heartfelt expressions of sympathy go out particularly to the men and women of United, American Airlines, and others -- family and relatives who have had horrible losses, personal losses, last week. We have tried to expedite consideration of this package because it does have a tremendous impact. If we've learned nothing else, we've learned of the rippling effect throughout our economy and other business -- industry, tourism, travel -- what really makes America go.

So we look forward to working with you. We'll try to keep this on fast track, and look forward to, again, working with the administration, both sides of the aisle, and the Senate, in a unified effort.

There being no further business, we'll let this panel be excused and call up the second panel.

Mr. Oberstar also moves that the record be open for a period of 30 additional days for additional statements by members, submission to the record of additional information, their data.

END

LOAD-DATE: September 20, 2001