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Senate approves $15 billion relief package for airlines
By JIM ABRAMS
Associated Press Writer
September 21, 2001

The Layoffs | The Workers | The Bailout | The State


Northwest Airlines announced Friday it will cut 10,000 jobs, or 19 percent of its workforce, and reduce service by 20 percent to counter a business slowdown in the wake of terrorist attacks in New York and Washington.
 
WASHINGTON (AP) - Congress again opened the federal coffers to those harmed by terrorism, providing $15 billion to the airline industry, which has suffered mounting economic losses since the Sept. 11 attacks in New York and Washington.

In rapid succession Friday, the Senate passed the bill, 96-1, followed by the House, 356-54. Opposition in the House was mainly among Democrats unhappy that the measure did not also provide aid for the 100,000 airline workers being laid off because of the industry's financial troubles.

Congress, battling before Sept. 11 over how to best keep government budget surpluses intact, has since agreed to $40 billion for victim relief and recovery efforts and Friday's help for the airlines.

Legislative leaders have promised those who considered the airline relief bill inadequate that Congress will consider measures to boost spending on aviation security and aid displaced airline workers.

"We are here to put back on its feet an industry that represents 10 percent of our $7 trillion gross domestic product, ... one without which all the rest of our economy fails," said Rep. James Oberstar of Minnesota, senior Democrat on the House Transportation Committee.

The aviation bill now goes to President Bush.

"This will help the airlines maintain short-term stability as they work toward long-term viability for the benefit of all the workers and companies that depend on air travel," the president said in his radio address Saturday.

The bill contains $5 billion in immediate grants to compensate airlines for losses suffered from the government-ordered grounding of flights and the subsequent drop in passengers following the hijacking of jets that crashed into the World Trade Center and the Pentagon.

The measure also authorizes $10 billion in loan guarantees to airlines near bankruptcy because of the steep decline in passenger demand, soaring insurance premiums and increased security costs linked to the terrorist attacks. Major carriers have announced cutbacks of 20 percent or more in service.

Other provisions include steps to ensure that smaller markets won't lose their air service, and to limit airlines' liability for the attacks to the maximum of their insurance coverage. The attorney general is also authorized to appoint a "special master" to decide on claims for those who opt not to file suit in federal court.

The bill provides domestic airlines with war risk insurance for 180 days and allows the transportation secretary to reimburse air carriers for premium increases.

Airline executives seeking loan guarantees are barred from receiving pay increases for a two-year period if their current salaries are above $300,000.

Several measures were inserted by lawmakers concerned that airlines would exaggerate their losses or use the government aid to make up for business losses incurred before Sept. 11.

The transportation secretary was authorized to audit loss estimates made by airlines, and Sens. Peter Fitzgerald, R-Ill., and Jon Corzine, D-N.J., included language requiring companies receiving loan guarantees to give the government warrants, or options to buy, the company's common stock.

Fitzgerald was the only senator to vote against the bill. He argued that Congress was "panicking with the taxpayer's money" and giving the industry more than it was actually losing.

The legislation was opposed by labor groups and Democrats who said it ignored the tens of thousands of airline and Boeing Co. workers who have been laid off since the nation's worst experience with terrorism. "This has been rammed at us by lots of people in suits who don't care about people who don't wear suits," said Rep. David Obey, D-Wis.

Sen. Jean Carnahan, D-Mo., has prepared a $3.75 billion package of health insurance, unemployment benefits and training for displaced airline workers that the Senate is expected to take up next week.

"This bill is really just the first installment," Senate Majority Leader Tom Daschle, D-S.D., said of the measure passed Friday.

(Copyright 2001 by The Associated Press. All Rights Reserved.)