[an error occurred while processing this directive]"The overall data shows there's no question that last Tuesday's events had a tremendous impact on the aviation business," Mineta said afterward. But before Congress takes up the issue, "it's too premature to come up with the details of what the package will look like." But all Senate Majority Leader Tom Daschle would say was that "there's a recognition of the extraordinary vulnerability we see economically with all the airlines" and told them to check in next week.
The industry is asking for a $24 billion bailout, Chrysler-style, with some money up front and the rest in a longer-term package loan guarantees, with the federal government co-signing to keep interest rates less than usurious. Congress is thinking more like $18 billion.
So the airlines have been put on standby. The question is, how long can they afford to wait?
Certainly the screams are growing deafening. The industry is already coming off its worst summer since the Gulf War, struggling with an economic slowdown, miniscule profit margins and staggering debt. And after losing hundreds of millions of dollars a day during last week’s total grounding, airlines have slashed schedules 20 to 60 percent this week as ticket sales have crashed. Even the flight attendants who lost 25 colleagues in Tuesday’s suicide hijackings, are requesting unpaid leaves out of fear for their lives.
They may not be needed back. United Airlines told CNN Tuesday that it plans to cut at least 20,000 employees, or 20 percent of its workforce, joining the announced-layoff parade at Continental (12,000), U.S. Airways (11,000) and Northwest (to be announced). Midway is already in bankruptcy. Continental, the most debt-ridden of all the majors, is talking about it for October. And many airline-watchers expect United and American to follow suit not least because a bankruptcy filing would protect them from getting sued by victims’ families.
But if Washington has apparently deemed the airline industry too big to fail, Wall Street is still trying to make up its mind how big it will be from now on. On its second day back to business, investors picked and chose a little, bidding most of the airline stocks back up a few points each after selling them down some 37 to 45 percent in Monday’s well-focused rout. But Continental’s soggy balance sheet and worried talk translated into more losses.
The first step for the industry and for Washington, if it wants to save it is to get passengers flying again. Congress may chip in for federalized airline baggage-checking and security forces, to be paid for with a $2 or $3 ticket-tax surcharge. That will save the industry some $200 million a year, and could go a long way toward making Americans feel like it’s safe to take to the skies again.
There may be a case for letting airlines fail as most of us remember from the past year, there are too many planes flying out of too few airports as it is but with the global economy staring down the tarmac at a U.S.-led synchronized recession, the clock is ticking. As long as half as many fights are taking off with half as many passengers, nobody is making money not airlines, not hotels, not casinos, not ski lodges or golf resorts. And how long can the American Way get by on pizza and a movie?