Tags: $24 | Billion | Airline | Bailout | Likely

$24 Billion Airline Bailout Likely

Tuesday, 18 September 2001 12:00 AM

While no firm figures have been decided upon, officials are leaning toward a package of about $24 billion in cash and loan guarantees from the federal treasury to be used to bolster the industry.

Airlines lost millions of dollars when they were grounded in the days following the September 11 terrorist attacks.

The downtime is already pushing some airlines into dire financial straits, and any consumer jitters that suppress air travel in the weeks and months to come will only make matters worse.

United plans to cut at least 20,000 jobs, Continental is cutting 12,000, US Airways plans to lay off 11,000 and Northwest Airlines reportedly plans to announce layoffs in the coming weeks.

A hearing scheduled in the House transportation committee on Wednesday will follow the Tuesday meeting.

"What we have now got is the kind of essential data that we need from the aviation industry to now put together a package," said Department of Transportation Secretary Norman Y. Mineta Tuesday.

"We will then go to the Hill and work with the Republicans and Democrats and come up with a timetable in trying to get this done as quickly as possible," said Mineta, who expressed hope in crafting a package "by the early part," of next week.

Democratic leadership in the Senate and House said they support the idea, as well.

"Clearly this is a vital part of restoring our economic strength and health," said Senate Majority Leader Tom Daschle (D-S.D.). "Unless we put airlines back together in a way that gives all passengers the confidence that they can fly again, we're going to suffer as a country."

Now that the immediate crisis has passed, it is time to turn to the financial stability of the airline industry, said Leo F. Mullin, chairman and CEO of Delta Air Lines.

Delta is the third largest U.S. airline in terms of operating revenue and carries more passengers than any airline in the world-120 million in the last year alone, according to the company.

"There's no question that this industry has suffered enormous financial damage via this terrible situation," said Mullin. "In ... three of the four days of last week, we had almost no revenue. And we would anticipate that in the next few days, revenue would probably be operating at no more than 40 to 50 percent of normal.

"With the heavy fixed costs in this industry, there is no way in the long term that our industry could survive with those levels," said Mullin.

Both Mineta and Democratic leaders said that a final dollar amount has not yet been put forward by the administration or by the airlines but that an aid package will likely be put forward and considered by Congress either this or next week.

Copyright 2001

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While no firm figures have been decided upon, officials are leaning toward a package of about $24 billion in cash and loan guarantees from the federal treasury to be used to bolster the industry. Airlines lost millions of dollars when they were grounded in the days...
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2001-00-18
Tuesday, 18 September 2001 12:00 AM
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