Copyright 2002 The Atlanta Journal-Constitution  

The Atlanta Journal-Constitution
October 2, 2002 Wednesday Home Edition
SECTION: Business; Pg. 1D

LENGTH: 580 words

HEADLINE: Airline relief on horizon;
Limited aid before panel

BYLINE: MARILYN GEEWAX

SOURCE: Cox Washington Bureau

BODY:
Washington --- A House panel is expected to vote today to provide the hard-hit airline industry with some financial relief, while a Senate committee will question Delta Air Lines Chief Executive Officer Leo Mullin on the industry's troubles.

Since last year's Sept. 11 attacks, airlines have been crushed by a combination of higher security costs and lower revenue. Last week, airline executives told the House aviation subcommittee they needed taxpayers' help to cover roughly $4 billion in new security-related costs.

Rep. John Mica (R-Fla.), the subcommittee chairman, promised to look for ways to defray airline costs tied to terrorism. Now his panel is about to approve legislation that would extend temporary terrorism insurance and ease security restrictions that have been depressing airline revenue.

The legislation would not, however, eliminate the new security tax of up to $10 per round-trip ticket, as airlines had requested.

Rep. Johnny Isakson (R-Ga.), a subcommittee member, said it's clear "there isn't going to be any bailout" involving cash grants to carriers. But lawmakers are sympathetic to airlines' pleas for help with security-related costs, he said.

For example, passing a provision extending government-backed catastrophic insurance "could happen in a heartbeat," he said.

However, given Congress' rush to adjourn and begin campaigning for the Nov. 5 election, it's far from clear whether lawmakers will squeeze in such a vote.

Last year, carriers lost a collective $7.7 billion. The industry is forecasting its 2002 losses could hit $8 billion.

On Tuesday, Lehman Brothers analyst Gary Chase downgraded his assessment of the industry, predicting that third-quarter earnings will be "ugly" because of continued weak demand, high costs, capacity reductions, labor problems and bankruptcy risks.

To help carriers survive, the House measure would:
 
* Extend existing "war risk" insurance coverage until the end of next year and freeze premiums.
 
* Require the Transportation Department to review rules that place air marshals in first-class seats even after cockpit doors have been reinforced. Airlines say that costs them desperately needed revenue.
 
* Set a deadline for screening U.S. mail so it can be carried again on passenger planes, restoring badly needed revenue.
 
* Reopen the $10 billion government loan guarantee program, passed last year, if the United States goes to war with Iraq.
 
* Authorize reimbursement for reinforcing cockpit doors.

Last week the Senate Commerce Committee approved security-related legislation that contained a provision extending insurance coverage. If the House passes Mica's measure, a committee of House and Senate negotiators would have to agree on final legislation.

The Senate Commerce Committee is holding a hearing today to find out more about the industry's troubles. Mullin is scheduled to testify, but United Airlines CEO Glenn Tilton and American Airlines CEO Donald Carty declined invitations to appear, citing scheduling conflicts.

That angered committee member Sen. Peter G. Fitzgerald (R-Ill.), who issued a public statement to Tilton and Carty, saying: "You come to the Senate asking for hundreds of millions of dollars and refuse to appear before the committee to detail why you need it in the first place. That's a slap in the face to the taxpayers."
 
* ON AJC.COM: The Delta Insider: www.ajc.com/business/delta/

GRAPHIC: Photo: Delta CEO Leo Mullin will testify today before the Senate Commerce Committee on airline industry problems.

LOAD-DATE: October 2, 2002