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Congress considers airline aid

WASHINGTON — Modest relief for struggling airlines may be on the way as their troubles worsen because of the war in Iraq.

Senate leaders said Wednesday they support an extension of government-sponsored war risk insurance and reimbursement for some of the new security costs airlines have borne since Sept. 11, 2001.

"There are a lot of costs they have to pay that we should be paying," said Sen. Trent Lott, chairman of a subcommittee on aviation.

Lott, R-Miss., said the government should compensate airlines for security measures it has ordered, such as bulletproof cockpit doors and background checks on catering workers who service airliners.

The airlines say they have been hurt in the first week of the war, cutting more than 10,000 jobs since military action began.

Domestic bookings for the next 60 to 90 days have fallen by one-fifth, and international bookings for the same period are down by 40 percent, according to James May, president of the Air Transport Association. May said the airlines are seeking $4 billion in help.

Severin Borenstein, a University of California professor at the Haas School of Business in Berkeley, said any aid simply will end up in the pockets of airlines' shareholders.

"The airlines are incredibly effective at selling this," Borenstein said. "They just want someone to pay for their losses."

The proposal would cost between $1.5 billion and $3 billion, said GOP Sen. Kay Bailey Hutchison of Texas, who met with the Senate leadership. As a result of the meeting, Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, said he would propose an amendment to the supplemental war budget next week.

Lott predicted the Bush administration would support the plan if the cost were limited. The White House indicated it probably will not back a major bailout because it believes market forces should be allowed to shrink the industry to meet demand.

US Airways, United and Hawaiian Airlines are in bankruptcy, and United Airlines said liquidation is a real possibility.

"Some of these airlines have such serious problems — management, debt — that a small war risk package is not going to save the day," Lott said.

A coalition of airline unions joined management this week in lobbying Congress for relief with the goal of keeping all the airlines alive.

"We want to ensure the survivability of all the airlines," said Capt. Paul Rice, spokesman for the Air Line Pilots Association.

Senate Minority Leader Tom Daschle, D-S.D., said the industry's problems could have a significant impact on unemployment.

"We really do have to address the worker issue," Daschle said.

House Minority Leader Nancy Pelosi, D-Calif., said Congress should help out-of-work airline workers. Lawmakers passed an airline relief bill 11 days after the Sept. 11 attacks, which included $5 billion in cash and $10 billion in loan guarantees.

"We need to help the industry because it is important to our economy, but we have to do so in a way that is better than we did in the initial bailout," Pelosi said.

House Speaker Dennis Hastert, R-Ill., whose district includes many United Airlines workers, supports airline relief but is not ready to announce what form he thinks it should take, said his spokesman, John Feehery.

"The goal is to help to reimburse airlines for the costs of the additional security measures because of the war," Feehery said. "The goal is not to help out airlines that can't survive on their own."