The White House on Wednesday night proposed an $8 billion plan to stabilize the airline industry, hours after American Airlines and United Airlines said they would eliminate a total of 40,000 jobs in the wake of last week's terrorist attacks.
The plan presented to lawmakers, according to a senior Bush administration official, would give the commercial and cargo carriers an immediate cash infusion of $5 billion. An additional $3 billion would be aimed at airport security. The proposal also includes government-provided insurance to keep planes flying and some liability protection for United and American for lawsuits from the attacks.
President Bush would put off the industry's request for additional billions of dollars in loans, which the airlines say they need to avert bankruptcies.
"This is an immediate reaction. This does not preclude additional actions," White House press secretary Ari Fleischer said today. "We'll continue to work with Congress on the question of loan guarantees," he said.
Transportation Secretary Norman Y. Mineta told the Senate Commerce Committee today that steps are under way to increase airline security beyond the measures initially announced after the terrorist attacks.
Two task forces are looking at issues such as improving airport screening, further expanding the number of armed sky marshals on planes and preventing passengers from gaining access to cockpits.
He said those task forces are scheduled to report their recommendations by Oct. 1.
Capt. Duane Woerth, president of the Air Line Pilots Association, said in prepared testimony that the airlines should immediately install deadbolt locks and an additional mesh-net door. He also said there should be at least two stun guns in the cockpits of airplanes.
Delta Airlines Chairman Leo Mullin told Congress on Wednesday that the industry wanted $12.5 billion in credit and loans.
"The financial damage is and continues to be devastating," Mullin told the House Transportation Committee. He cited the shutdown of service last week and prospects of sharply reduced business in coming months.
So far there have been nearly 86,000 airline-related layoffs, and more are on the way, as Northwest and others have suggested that they will cut jobs soon. Aerospace parts suppliers also face an untold number of cuts as they cope with the drop in demand for new jetliners that led plane manufacturer Boeing Co. to announce 30,000 layoffs of its own this week.
Adding to the sense of financial urgency, US Airways -- which plans to trim 11,000 workers -- told investors Wednesday that it is burning up operating cash at an "alarming rate."
Lawmakers on Capitol Hill have debated how far they should go to bail out the industry, which is an important sector of the economy. Its financial problems have contributed significantly to the pessimism on Wall Street that has sent markets tumbling.
Complicating the political debate about saving the airlines, though, is a larger question: How could such a vital part of the nation's commercial fabric fall apart so quickly and so completely?
Part of the answer is that even before the disastrous hijackings, the airline industry already was one of the weaker sectors of the economy. The general economic slowdown had dampened business travel, and with less money coming in the gate, the airlines struggled to repay debt they had run up buying fleets of new jets. High labor and fuel costs worsened the situation.
Then came the terrorist attacks, closing the nation's skies for two days and frightening travelers for perhaps the rest of their lives.
Because of those factors, the airline industry has asked the federal government for help.
The Bush administration proposal would provide $5 billion in immediate cash to airlines and $3 billion to enhance airline safety and airport security.
The government would also insure all domestic flights from any acts of war or terrorism for the next 180 days, because many carriers are either losing their insurance policies or seeing their rates soar.
Finally, the Bush administration will propose a Terrorist Attack Liability Act, which would shield American and United from some of the legal impact of the attacks.