Congress OKs $15 billion to rescue airline industry

Overwhelming approval

Bush is likely to sign quickly

`Cannot let airlines fail'

American, United partially protected from liability claims

Terrorism Strikes America

Business Impact

September 22, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - Seeking to stabilize the reeling airline industry - and halt the economy's slide into recession - Congress overwhelmingly approved a $15 billion package last night to compensate the airlines for losses resulting from the terrorist attacks last week.

After a brief debate, the Senate approved the measure 96-1. Sen. Peter Fitzgerald, an Illinois Republican, cast the lone dissenting vote.

The House vote of approval later in the evening was 356-54.

The emergency legislation, taken up after urgent appeals this week from airline executives, would distribute $5 billion in cash directly to the airlines. An additional $10 billion would come in the form of loan guarantees.

President Bush, whose aides took part in negotiating the package, is expected to sign it into law soon.

"We simply cannot let the airlines fail," said Rep. Jim Ramstad, a Minnesota Republican. "It would be absolutely devastating to our economy, as well as to airline employees and their families and hundreds of airlines passengers nationally."

The measure would also grant United Airlines and American Airlines limited liability from damages, except to passengers, caused when their hijacked planes crashed into the World Trade Center and the Pentagon.

Under the legislation, the families of victims in the buildings or on the ground could not pursue liability claims against the airlines. But they could seek damage awards from the federal government or from a new victims' compensation fund.

And the federal government would subsidize the airlines, for six months, for the higher insurance premiums they could face because of the higher perceived risk of terrorism.

The industry had warned that without such relief, it could no longer afford or obtain insurance.

Sen. John D. Rockefeller IV, a West Virginia Democrat, argued that if Congress failed to act yesterday, planes would not be flying next week.

Many of those affected are from Baltimore, a hub for US Airways, which has said it will lay off 11,000 workers.

All eight members of the Maryland delegation voted in favor of the bailout.

Yet many lawmakers expressed concerns about the hastily drafted package. Some complained that it was too generous to the airlines and noted that it provides no benefits for laid-off airline employees.

"It's way too much money," said Fitzgerald, who cast the sole vote against the measure in the Senate. "We should have some strings attached if we're going to give them all that government money. They could take that money and still you'd see lots of layoffs."

Fitzgerald said Congress was "panicking with the taxpayers' money," after urging other Americans not to panic as the nation struggles to recover from the attacks and prepares to strike back.

Rep. Nancy Pelosi, a California Democrat, complained that the bill includes no new measures to tighten airport security. She argued that an "airline bailout without addressing passenger fears is only a temporary fix."

But Congress was under extraordinary pressure to move quickly. The industry said it expects $5 billion in losses from the day of the attack, Sept. 11, to the end of this month because of the initial halt in all flights, the slow return of still-jittery passengers and the costs of new security measures.

As a result, the major carriers are cutting their flight schedules by about 20 percent. Together with the aircraft builder Boeing Co., they are expected to lay off a total of more than 100,000 workers.

Northwest Airlines added 10,000 to the jobless rolls yesterday, after a series of similar announcements earlier in the week from other carriers.

Senate Majority Leader Tom Daschle and House Democratic leader Richard A. Gephardt both spent days trying to convince their members that steps to aid displaced airline workers - for example, with unemployment benefits, job training and access to health benefits - would be addressed in future legislation. "Today, we guarantee that air service will continue," Daschle told the Senate. "In the coming days and weeks, I expect us to take the steps that will allow us to support those who have been displaced, and strengthen the American people's confidence in the safety and security of that service."

"And we will do it sooner rather than later," Daschle pledged.

House Speaker Dennis Hastert made a similar commitment to his colleagues last night.

The issue was difficult because while lawmakers wanted to help the airlines, many said they were uneasy about granting too much to a single industry.

Lawmakers agreed that the airline industry was the most drastically affected of any by the Sept. 11 attacks. And they also note that commercial airlines are vital to the health of the economy.

"Airlines make up 20 percent of the economy," said Sen. Larry E. Craig, an Idaho Republican.

But segments of the airline industry were struggling before the attacks. Lawmakers said they did not want taxpayers to be bailing out airline shareholders for bad business decisions.

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