Congress proposes
$3 billion for airlines

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By John Hughes and Laura Litvan
Bloomberg News

Washington >> U.S. carriers, including AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, will get about $3 billion in aid to cover Iraq war-related losses under an agreement reached by House and Senate negotiators.

Carriers would receive $2.3 billion from the U.S. Treasury to cover security costs, according to a House Appropriations Committee statement. Airlines would get $100 million for some costs of replacing cockpit doors with models that withstand bullets, human force and some explosives, the statement said.

Airline war-risk insurance subsidies would be extended for an additional year, to Aug. 31, 2004, saving carriers about $600 million, according to the office of Senator Patty Murray of Washington, top Democrat on the Senate Appropriations Committee's transportation subcommittee.

U.S. airlines lost a record $11.3 billion in 2002 and said losses could reach $10.7 billion this year without government aid. United, the second-largest U.S. carrier, is operating in bankruptcy. US Airways Group Inc. emerged from bankruptcy last month. AMR Corp.'s American Airlines, the world's largest carrier, hopes to avoid a bankruptcy filing through worker concessions. Airlines had been seeking $4 billion from Congress.

The airline aid is part of an almost $80 billion measure to pay for the beginning of the Iraq war and homeland security. Negotiators are trying to finish a compromise measure in time for final votes tomorrow.

The legislation also extends unemployment benefits for laid- off aviation industry workers for 26 weeks. The benefits will cover about 200,000 thousand workers and cost about $275 million, said a statement from Murray, who co-sponsored the worker proposal.

The top two executives of airlines that receive aid must limit their pay to 2002 levels for one year, the legislation said. The limit doesn't apply to stock options and pre-existing retirement contracts, lawmakers said.

Small carriers and airlines that serve only North American destinations were exempted from the executive pay restriction. "They don't have the outrageous salaries which other executives had," Senator Harry Reid, a Nevada Democrat, said of the small airline executives.

The House last week approved $3.2 billion to reimburse airlines for security costs. The Senate adopted a $3.5 billion airline aid proposal. White House spokesman Ari Fleischer called the aid amounts "excessive."

Negotiators are expected to complete their work on the broader measure early tomorrow.

The legislation includes about $62 billion for the Pentagon and more than $4 billion to bolster homeland defense.