Congress, Bush agree on airline aid

WASHINGTON — Congress and the White House agreed early today on a $15 billion plan to financially bolster the airline industry in the aftermath of the terrorist attacks that has threatened the survival of some airlines.

The House is expected to approve the package, which also provides some liability protections for the airlines, later today and the Senate was expected to swiftly follow suit.

Transportation Secretary Norman Mineta, negotiating with congressional leaders on the final details of the package, said the administration was satisfied with the outcome.

The agreement came after midnight, several hours after President Bush, in an address to Congress, promised that "we will come together to promote stability and keep our airlines flying with direct assistance during this emergency."

The package includes $5 billion in direct grants to the airlines to compensate them for the losses suffered after the Sept. 11 attack, when hijackers crashed commercial jets into the World Trade Center and the Pentagon. Airlines were grounded for several days and have since had to cut back schedules by 20 percent or more because of the declining number of air travelers.

The government will also provide the airlines with loan guarantees of $10 billion.

Mineta said there was also an agreement that the federal government would spend $3 billion to upgrade security in airplanes and airports. That sum would come out of the $40 billion in emergency spending that Congress approved last week for recovery and victim relief efforts.

"It's another fine moment in terms of bipartisan cooperation," White House budget chief Mitchell Daniels said.

Senate Majority Leader Tom Daschle, D-S.D., said the two airlines involved in the hijackings, United and American, would be responsible for liability claims filed by the families of passengers on those planes, but the government would compensate victims on the ground.

He said that under the proposal the attorney general would appoint a "special master" to consider the claims of victims.

Other airlines would also get war risk insurance for domestic flights. Currently only international routes have such coverage.

Delta Air Lines Chairman Leo Mullin, in a second day of testimony on Capitol Hill, told the Senate Commerce Committee that without government help, "the future of aviation is threatened."

The airlines want compensation for the direct effects of the attacks.

Mullin sought $5 billion in direct aid, $12.5 billion in loan guarantees and liability relief.

Mullin indicated that several major airlines are on the verge of bankruptcy. Air carriers, along with Boeing, have announced layoffs of more than 100,000 workers.

The investment firm Morgan Stanley, in a letter to Treasury Secretary Paul O'Neill said there will be "no functioning capital markets for the U.S. airline industry" unless the government provides "relief from what would surely be bankruptcy-inducing liability claims against carriers for collateral damage and loss of life" from the attacks.

The Senate is expected to give quick approval to the rescue package once it clears the House. But several Commerce Committee members said they wanted to be sure the relief was confined to losses directly related to the terrorist attacks, and was not used to prop up airlines that were failing before Sept. 11.

Other senators expressed reluctance about helping the airlines but doing nothing for the hotels, restaurants, travel agencies and laid-off workers also affected by the slowdown in air travel.

"Who finally will bail out the American taxpayer?" asked Sen. Peter Fitzgerald, R-Ill.

Committee Chairman Ernest Hollings, D-S.C., a longtime critic of the airline industry, agreed that short-term assistance is inevitable. "I don't think we can afford to dilly around," he said.

Mullin, representing the industry, said he was pleased with the $5 billion cash infusion, which he said would equal the airlines' losses between Sept. 11 and Sept. 30. He also liked the president's plan to provide $3 billion for airline and airport security improvements, including fortified cockpits, sky marshals and additional airport searches.