Rescue package for airlines would aid Boeing too

WASHINGTON -- Congress can soften the fall for thousands of workers at The Boeing Co. by passing a rescue package for the nation's battered airlines and aiding laid-off workers, Washington state lawmakers said yesterday.

Last night, The Associated Press reported that President Bush will ask Congress to give the nation's beleaguered airlines $5 billion in immediate cash aid plus significant help with their insurance liability -- but not, for now, the loans that the industry says it needs to avert bankruptcies, an administration official said.

The announcement came the same day that 40,000 additional airline workers lost their jobs, and one day after Boeing announced cuts of up to 30,000.

While specific strategies are still being developed "in the scramble" to help Boeing recover, there was universal agreement on one approach: Helping airlines survive is the best and most obvious way to help Boeing.

That means providing federal dollars to help them survive a sharp decline in ridership and taking steps to improve public confidence in the safety of air travel.

"The best way to support Boeing is to ensure that we have an airline industry that is able to buy airplanes," said Rep. Rick Larsen, D-Wash., whose district includes the sprawling Everett plant where 25,000 employees assemble Boeing's biggest planes, the 747s, 767s and 777s.

Beyond that, lawmakers are considering offering laid-off workers federal assistance for job training and preparing workers for new careers, extending the unemployment benefits for cut employees and even this unorthodox approach: Rep. Peter DeFazio, D-Ore., suggested requiring that any airline planning to cancel an aircraft order back out of all deals with Boeing's competitor, Airbus, before canceling with Boeing.

Another idea being pursued by Reps. Norm Dicks, a Democrat, and Jennifer Dunn, a Republican, proposes using excess capacity at Boeing's assembly plants to build military variants of the 757 and 737. The Pentagon supports the idea because it would provide new planes to replace aging aircraft, especially airborne tankers.

Those ideas and others are all part of a unified effort by the state's congressional delegation to find a way to reverse, or at least minimize, the number of jobs lost at Boeing.

"I'm just not willing to give up on 30,000 jobs," Dunn said.

A Boeing spokesman said the company would not ask for direct federal aid, preferring that any tax dollars go to the airlines. "Our company is still financially sound," spokesman Rick Fuller said. "We have our military business and our space business. But if the major airlines start folding" Boeing will be in severe trouble.

Congress is likely to pass legislation by the end of the week to further assist the airline industry. Airlines have asked for a package amounting to $24 billion, while the White House and Congress have backed a $17.5 billion package.

While the bottom lines differ, all sides agree that the package should include loan guarantees and rebates, $5 billion in direct subsidies, $7.8 billion in tax changes and relief from the 4.4 percent jet-fuel tax.

It is not clear if the package's worth will be reduced after Bush's move last night.

The administration official, who provided details to The Associated Press on condition of anonymity, said Bush believes such measures are the "essential steps for immediate safety and stability" and, once they are enacted, he and Congress will talk about loans in order to bolster the airlines' longer-term solvency.

The president will immediately spend $3 billion of the emergency funds that Congress gave him over the weekend to pay for airline and airport security improvements such as fortified cockpits, sky marshals and additional airport searches.

Under Bush's proposal, the federal government would give airlines "temporary terrorism-risk insurance" on all their domestic flights for 180 days. Currently, only international routes have such coverage.

Bush is also proposing to help shield airlines from inevitable lawsuits related to last week's terrorist hijackings. He would bar punitive damages and consolidate all lawsuits into a single federal court, the U.S. District Court for the Southern district of New York. The government would also pick up whatever cost of compensating victims for damages ultimately exceeds the limits of the airlines' insurance policies.

"The financial damage is and continues to be devastating," Delta Airlines Chairman Leo Mullin told the House Transportation Committee, citing the shutdown of service last week and prospects of sharply reduced business in coming months.

"If you want to fundamentally support our suppliers, such as Boeing, the best way to do that is to keep us (financially) stable," Richard Anderson, chief executive of Northwest Airlines told the committee.

Yet even if Congress provides the money the airlines say they need, industry officials conceded that 100,000 jobs will have to be eliminated.

"Our challenge is to restore public confidence in air travel and to revive airline finances so this cornerstone industry ... can recover in the shortest possible period," said Rep. James Oberstar of Minnesota, ranking Democrat on the panel.

That sentiment was echoed by Boeing Chief Executive Officer Phil Condit, who urged Bush in a letter Tuesday, the same day his company announced the layoffs, to support a federal rescue of the airlines.

This report includes information from The Associated Press.

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