Airlines worry about potential financial pressures = = Wednesday September 18, 3:13 PM EDT = By John Crawley WASHINGTON, Sept 18 (Reuters) - Worried about possible war with Iraq and = other U.S. policy developments, big airlines are wrestling with the prosp= ect of new cost pressures they say could devastate an industry already in= serious trouble. Airline chief executives have met with congressional leaders in recent da= ys to stress that most big carriers are again headed for titanic losses a= nd that developments in Washington could determine their fate. Each of three potential scenarios that could materialize in the coming we= eks or months would not individually bury the industry, airline executive= s have told Congress and the Bush administration. But the prospect of sharply higher fuel prices as a potential consequence= of an Iraqi conflict, new taxes or fees for airport security, and no act= ion on their appeal for help in maintaining "war-risk" insurance could co= nverge as a "perfect storm" that could be disastrous for the industry, th= ey said. = "In light of the industry's perilous financial condition, Congress and th= e administration must act now to prevent the crippling of our aviation sy= stem, or even worse, industry collapse," said Michael Wascom, a spokesman= for the industry's top lobbying group, the Air Transport Association. The last round of lobbying with Republican and Democratic leaders was the= biggest deployment of industry muscle since the group pressed lawmakers = for a federal bailout after the Sept. 11, 2001, hijack attacks. Congress = eventually approved $5 billion in cash aid and a $10 billion loan guarant= ee program. INDUSTRY IN PERIL In one meeting last Thursday attended by 10 airline chief executives, Ame= rican Airlines (AMR) Chief Executive Donald Carty told Sen. Harry Reid of= Nevada, the assistant Democratic leader, that new fees, no insurance hel= p, and a conflict with Iraq could cause almost a dozen airlines to go bro= ke. The case was also made in meetings with Senate Minority leader Trent Lott= of Mississippi and House Minority leader Richard Gephardt of Missouri. In an interview with Reuters reporters and editors before their meeting, = Gephardt suggested that airline executives submit a detailed report to Co= ngress soon about the state of their finances. He also said one way lawma= kers could help would be for the government to pick up some of the costs = that airlines pay for health insurance and pensions. The major U.S. airlines were $7 billion in the red last year and expect s= imilar losses in 2002. American alone has lost $2 billion in the past yea= r. US Airways (UAWGQ) already has filed for bankruptcy and United Airline= s (UAL) has said it might do so soon. Airline share prices have also slumped along with industry finances. Deut= sche Bank Securities analyst Susan Donofrio lowered earnings estimates th= is week for six major U.S. carriers, citing sluggish revenue. OIL, FEES, INSURANCE Iraq produces a fraction of the world's oil but the prospect of war has k= ept prices hovering around $30 a barrel. Airlines fear that a military co= nflict will push prices significantly higher, at least temporarily, and m= ake jet fuel more expensive at a time when carriers are desperate to slas= h costs. Jet fuel averaged 75 cents a gallon in August. But traders, also worried about war, already have added up to $4 a barrel= to cushion the impact of any price surge. On fees, some in Congress are fed up with the huge bill -- $6 billion sin= ce January and more than $5 billion proposed for 2003 -- borne by taxpaye= rs for airport security upgrades. Lawmakers and the administration are co= nsidering a new round of taxes and fees on airlines and their passengers = to spread out the costs. Airlines pay a range of taxes and fees to use airports above the annual c= ost of security, which runs about $700 million for the industry. Passenge= rs also pay a fee of up to $10 per round-trip ticket for security. Airlin= es argue any price increases will further sap demand. "I think the government needs to do more," US Airways Chief Executive Dav= id Siegel said about security expenses after delivering a speech to an in= dustry trade group this week. "We don't think it's a cost that should be = borne by the airlines. We're already overtaxed." According to the Air Transport Association, industry insurance costs have= tripled since the hijack attacks. Many underwriters, fearing the prospec= t of more attacks using commercial airliners, have mainly pulled out or d= ramatically raised premiums and cut coverage below levels required under = international law for airlines to operate. The government has stepped in to guarantee "war-risk" liability coverage = in excess of $50 million but the airlines want a longer term commitment. = The current "war-risk" guarantee expires in October and a Senate plan unv= eiled on Tuesday would extend it for nine months. "This industry cannot shoulder any additional costs," the ATA's Wascom sa= id. "We simply don't have the means to do it." = =A92002 Reuters Limited. = Roger EWROPS