Airlines Seek $24 Billion Government Aid
siliconinvestor.com
Sep 17 6:25pm ET
By Kathy Fieweger
CHICAGO (Reuters) - U.S. airlines want $24 billion in government aid to stabilize
finances following the crash of four hijacked jetliners last week that threw the industry
into a crisis, the Air Transport Association said Monday.
The package includes $11.2 billion in loan guarantees that would be backed by the
federal government, $7.8 billion in tax relief and $5 billion in direct cash assistance,
ATA vice president of communications Michael Wascom told Reuters.
"This is not a bailout," Wascom said. "This is survival we are talking about."
Six or seven airline executives will meet with U.S. Transportation Secretary Norman
Mineta and White House economic advisor Larry Lindsey in Washington on Tuesday.
Tax relief sought would include suspension of the 4.4 cent per gallon tax on jet fuel, as
well as waivers on passenger ticket taxes and so-called "cargo weigh bill" taxes.
The ATA, a trade association representing 21 passenger and cargo carriers, said the
need is critical and immediate.
"For some of the airlines it's only a matter of days before they run out of money,"
Wascom said.
TRUST FUND SURPLUS
Wascom noted the federal Airport and Airways Trust Fund, set up to improve the
nation's airports, has a $12 billion surplus from collecting various taxes.
Asked if airlines would seek to use that surplus, Wascom said: "Everything's on the
table."
The $5 billion in direct aid would be parceled out according to a carrier's size, not to its
financial condition prior to Tuesday's crash of four hijacked aircraft in New York and
near Washington D.C.
The ATA predicts over the next few weeks and months, traffic will drop anywhere from
25 percent to 60 percent.
"We're making every attempt to make sure we don't become the next casualty of this
war," Wascom said.
Airline stocks dropped sharply on Monday -- from 25 to 65 percent -- first day of
trading since last week's attacks shut down the nation's airspace for two full days.
Some carriers only resumed flying as of Friday and operations are not yet back to
normal levels for most.
Continental Airlines on Saturday warned of a potential bankruptcy filing in late October
with no financial assistance. It is cutting 12,000 jobs or 21 percent of its workforce.
Also slashing jobs are US Airways Group with 11,000 jobs and America West
Holdings trimming 2,000.
The ATA said job losses could exceed 100,000 in the next few months.
Darryl Jenkins, director of the Aviation Institute at The George Washington University,
said on Monday there are five U.S. carriers on what he calls the endangered list.
Those are Continental, Northwest Airlines America West US Airways and AirTran . If
load factors fall below 40 percent, some or all of those carriers will be forced to seek
bankruptcy protection within the next 30 to 60 days, Jenkins said.
Wascom declined to comment on which carrier has the most pressing financial need.
Will be interesting to see if the huge sell offs in all airlines were warranted.
Regards
Jay |
