HEADLINE:
Airlines could get additional financial help from Congress
BYLINE: Barbara De Lollis
BODY: Congress seems poised to help the airline
industry again, providing war-risk insurance for another year
and possibly reopening the controversial loan guarantee program in the event of
an Iraq war.
But other requests that four
airline CEOs put before the House Aviation Subcommittee Tuesday probably won't
be met, including elimination of the tax added after the terrorist attacks to
pay for increased security measures.
Committee members didn't hide their frustration with the airline
industry, still struggling almost a year after Congress approved a $ 5 billion
cash compensation package to help the companies recover from the attacks and the
$ 10 billion loan guarantee program, which expired in June.
Listening to the industry's financial woes was deja vu for
Rep. James Oberstar, D-Minn. He said that as a committee member, he heard the
same recitation of problems in 1981, 1993, 1995 and 2001. "Seems it's about
every few years," he said. "We might not have a lot to do if we didn't have
financial problems in the industry."
Delta
CEO Leo Mullin suggested the government end the $ 2.50-a-segment security tax --
which adds as much as $ 10 to a round-trip ticket -- because airlines aren't
able to raise fares enough to pass on the cost to passengers.
But subcommittee Chairman John Mica, R-Fla., held out
little hope for that. "You're going to have to figure out a way to pass it on,"
he told the CEOs. "I just don't see the support for that in Congress."
Mullin also said airlines need help paying
for some of the costs of complying with post-Sept. 11 security mandates, such as
reinforced cockpit doors, first-class seats for air marshals and screening
catering trucks. The mandates will cost about $ 4 billion, or about 40% of the $
7 billion the industry is expected to lose this year, he said.
The effects of having four airline CEOs pleading for help
in Washington rippled onto Wall Street. Shares of major airlines continued their
slide, spurred by fears of war and rising jet fuel prices.
Shares of American fell almost 15% to $ 3.60, and United
shares dropped 9% to $ 2.12. Delta shares fell 11% to $ 10.06, and Northwest
shares dropped nearly 3% to $ 7.06.
Shares
of some airlines are trading at 20-year lows, said American CEO Donald Carty.
He said survival has required airlines to
borrow so much money that the average U.S. carrier today is 90% leveraged.
The tales of woe spurred one lawmaker to
raise the specter of re-regulation. "We're seeing the final throes of a failing
industry," said Rep. Peter DeFazio, D-Ore. "It's time to question whether
cutthroat deregulation is going to work."
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