White House, Congress nearing agreement on airline bailout
WASHINGTON (CNN) -- The White House and congressional leaders are nearing agreement on a $15 billion bailout for the airline industry, senior administration officials and senior congressional sources tell CNN.
The package, the subject of intense discussions between industry CEOs, the congressional leadership and the White House, could reach the House floor as early as Friday.
Senior White House and congressional officials told CNN the main components of the bailout would include these points:
-- Between $2.5 billion and $5 billion in direct cash payments to compensate the airlines for revenue lost due to the shutdown following the September 11 terrorist attacks;
-- $12.5 billion in loan guarantees;
-- A delay in quarterly tax payments to improve the airlines' short-term liquidity.
"We'll be ready to go tomorrow," said a senior White House adviser heavily involved in the negotiations. The source was referring to completing the specifics of the bailout bill, not congressional action. "We want to get the facts and we are consulting with everybody about everything."
In a closed door meeting Tuesday, the airlines made their case to House and Senate Republican and Democratic leaders.
"There's no doubt that they are struggling. But there is equally no doubt that working together we can survive this and we can put them and all of them associated with air transportation infrastructure in a position of strength," said Senate Majority Leader Tom Daschle after the meeting.
Daschle suggested a package might not pass the Senate and House "with unanimity" but the hope is to develop measures that a wide majority could agree on.
Earlier Tuesday, Transportation Secretary Norman Mineta said the Bush administration will go to Congress quickly with a financial aid package to "ensure the security, the safety and the stability of the airline industry."
Mineta met with airline executives Tuesday morning and told them his top priorities are improving safety and making sure the airlines are on strong financial footing.
Attending the meeting were top industry executives including Leo Mullin of Delta Air Lines, Don Carty of American Airlines, Richard Anderson of Northwest Airlines, Rakesh Gangwal of US Airways, Jim Goodwin of United Airlines, and Fred Smith of Federal Express.
Also at the talks were Air Transport Association CEO Carol Hallett, and Federal Aviation Administration chief Jane Garvey.
In written materials, the airlines told Congress "the total shutdown of the commercial air transportation system and gradual resumption of scheduled service will have cost the U.S. airline industry approximately $5 billion."
The industry also forecasts massive declines in airline revenue. By their projections, the industry's revenues will be down 60 percent in September and 40 percent for the fourth quarter of 2001.
Industry officials also told members of Congress in the documents that they expect to announce the cutback of more than 100,000 employees "as a result of dramatically reduced demand." Cutbacks already announced include 20,000 jobs by United and 12,000 by Continental and U.S. Airlines has said it expects to cut 11,000.
The airlines also project that within 90 days most of the airline industry will be in Chapter 11 bankruptcy proceedings.
A measure that would have provided $2.5 billion in cash assistance to the airline industry and another $12.5 billion in loan guarantees was put off in the House Saturday amid concerns of special treatment for airlines.
That same day, Continental Airlines said it was cutting back on 20 percent of its routes and furloughing 12,000 employees.
Other airlines soon followed suit. Sources familiar with United Airlines told CNN Tuesday that the airline plans to cut at least 20,000 employees, or 20 percent of its workforce. US Airways has said it would cut capacity 23 percent and lay off 11,000 employees. Northwest and American also have announced schedule cutbacks and are expected to cut jobs, and Delta plans cutbacks as well.
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