Airlines To Feds: Send $$

Sept. 23, 2002

The nation's big airlines are preparing to ask the federal government for a new round of emergency financial help, as the industry deteriorates further amid weak passenger traffic and rising fuel costs, Monday's Wall Street Journal reported.

The spring and summer travel seasons were a big disappointment for major carriers. Early signs that revenue was gradually recovering in the months after last September's terrorist attacks stalled in March, as the fragile economy and airport-security hassles deterred passengers.

August revenue was the latest in a series of let-downs: Unit revenue, a key measure of how much money a carrier fetches per seat-mile flown, was down 17.2% from 2000, the last decent period for the industry, and down 6.6% from last year, when airlines were already in a funk. This month's traffic, hurt by nervousness surrounding the one-year anniversary of the attacks, is shaping up to be awful.

Most of the stocks of the big carriers have tumbled to levels far below the lows set after last year's terrorist attacks. Wall Street analysts in recent days widened their estimated loss for the industry, and many now predict that the 2002 outcome will eclipse last year's record $7.7 billion loss. Last year's figure includes a $5 billion cash infusion from the federal government to offset losses stemming from the shutdown of the nation's air space following Sept. 11.

"Revenue is not coming back," says Leo F. Mullin, chairman and chief executive officer of Delta Air Lines. "It's not a pretty picture."

Unlike the earlier bailout of direct cash payments, airlines are lobbying the government to assume more of the costs for aviation security and insurance, and to provide tax relief. Such aid could run into the billions of dollars, industry executives say.

Industry officials, including Mr. Mullin and Donald Carty, CEO of American Airlines' parent AMR Corp., have made a round of visits to congressmen and senators in recent weeks to relate their rising concerns. The House subcommittee on aviation has scheduled a hearing for tomorrow on the airlines' financial health, and executives are expected to paint the gloomiest picture ever for the industry. "It's a dire situation," says Joe Leonard, chief executive of low-fare carrier AirTran Airways, who is scheduled to testify. "I've never seen anything like it."

Wall Street Journal Staff Reporters Martha Brannigan, Scott McCartney, Daniel Michaels and David Rogers contributed to this article.

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