Jewish World Review April. 3, 2003 / 30 Adar I, 5763
Airlines can stay afloat on their own during this war
http://www.jewishworldreview.com | Well before the first shots were fired in Iraq, the Air Transport Association (ATA) issued a dire warning about the coming conflict. James May, the trade group's president, projected $10.7 billion in likely industry losses, a reduction of 2,200 daily flights and the elimination of 70,000 additional airline jobs in the United States. "There is serious risk of chaotic industry bankruptcies and liquidations," the ATA reported.
Just this week, American Airlines narrowly avoided an immediate bankruptcy filing, but will lay off 20% of its pilots. United Airlines, already in bankruptcy, seeks $2.56 billion in annual labor savings through 2008. US Airways emerged from Chapter 11 protection on Monday, but a 20% drop in its bookings during the war's first week tempered that good news.
"We'll have to manage our business based upon what happens in the Middle East," US Airways spokesman David Castelveter said.
Aid for airlines
So it is no surprise that congressional Republicans are pulling together a package of roughly $2.8 billion to offset the airlines' security and insurance costs. That's on top of the $5 billion in aid and $10 billion in loan guarantees related to 9/11 that the airlines already have pocketed. And there's talk of even more money on the way.
Lawmakers should consider these requests carefully. Is this conflict really going to cripple the airline business? Not necessarily. If the war's bitter effects serve to make the airlines more efficient and competitive, the results will be healthier companies and better-served travelers. Consider:
Among the desperately needed changes: reducing bloated wages, cutting operating expenses and maximizing capacity by flying more full aircraft to high-demand destinations.
Let them go it alone
The war in Iraq promises to accelerate this restructuring process; a bailout now would arrest it. Left alone, the airlines that emerge from this difficult stretch will be more able to serve Americans' transportation needs.
The notion that war is good for business isn't new. It has been proved time and again, including after World War II, during which the entire economy was lifted out of the Great Depression by the war's stimulus to spending.
More government money might help the airlines in the short term. But down the road, that aid would leave the United States with a weak, inefficient and uncompetitive airline industry.
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