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Editorials
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Tuesday, March 25, 2003



[ OUR OPINION ]

Airlines may need
help surviving war


THE ISSUE

Hawaiian Airlines has joined other carriers in filing for bankruptcy, as the airlines brace for more problems.

TURBULENCE does not adequately describe the Iraq war's potential collateral damage to the nation's airlines. Hawaiian Airlines is the latest to file for bankruptcy protection, joining United Airlines and US Airways in Chapter 11 reorganization proceedings. Congress and the Bush administration need to find ways to rescue the airlines while avoiding creation of monopolies or, as some fatalists muse, the drastic step of nationalizing them.

Hawaiian, which lost $58 million last year, reported having more than $100 million in debt, along with $100 million in assets. It recently obtained $15 million in annual contract concessions from its employees and is seeking the same amount in reduction of lease expenses for its aircraft. The airline plans no layoffs and hopes to emerge from bankruptcy protection by fall after coming to terms with the aircraft leaseholders.

All of the nation's top carriers are ailing. United, the country's second-biggest airline, which lost $3.2 billion last year, filed for bankruptcy in December and recently announced an 8 percent reduction of its schedule. Glenn F. Tilton, chief executive of United's parent, UAL Corp., warned last week that it might be forced to liquidate if it did not obtain $2.56 billion in wage and benefit concessions.

US Airways, the seventh-largest, filed for Chapter 11 in August but is expected to emerge after its pilots agreed to pay cuts of 32 to 40 percent. American Airlines, the world's largest, is seeking nearly $2 billion in concessions from workers to avoid bankruptcy. Northwest, the fourth-largest, is cutting its schedules by 12 percent and laying off 4,900 workers, 11 percent of its work force.

Even Delta Air Lines, the third-largest, described by a spokesman as "the prettiest puppy in an ugly litter," is reeling from a year in which it lost $1.3 billion, although it still has $2.6 billion in reserves. Delta is seeking wage concessions from its pilots, now the highest-paid in the industry with senior pilots making $250,000 or more.

Some of the airlines were in financial trouble from their own mismanagement before the Sept. 11 attacks. The Air Transport Association, the industry's lobby, estimated before the Iraq war that airlines would lose $6.7 billion this year and expected the war to increase that deficit by $4 billion, leading to 70,000 layoffs.

The airlines want and should receive government relief from fuel taxes and compensation for security costs. The Department of Transportation also should drop its opposition to further airline marketing partnerships, such as the alliance of Northwest, Delta and Continental.

Only days before the Iraq war began, Senator Inouye announced his opposition to extending past Oct. 10 a temporary antitrust exemption granted to Hawaiian and Aloha airlines in December that has allowed them to coordinate interisland capacity. That scheduled expiration date may have to be extended to keep Hawaiian aloft, but it should not be broadened to further reduce competition, as Aloha has proposed to the state Legislature.



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Published by Oahu Publications Inc., a subsidiary of Black Press.

Don Kendall, Publisher

Frank Bridgewater, Editor 529-4791; fbridgewater@starbulletin.com
Michael Rovner, Assistant Editor 529-4768; mrovner@starbulletin.com
Lucy Young-Oda, Assistant Editor 529-4762; lyoungoda@starbulletin.com

Mary Poole, Editorial Page Editor, 529-4748; mpoole@starbulletin.com

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