This article from NYTimes.com has been sent to you by psa188@juno.com. 2 Airline Executives Say Industry Needs More U.S. Aid January 10, 2003 By ELIZABETH OLSON WASHINGTON, Jan. 9 - Two of the nation's biggest airlines told Congress today that they were searching their operations for cost cuts but still needed government help to pay for new security measures and to tackle their single largest expense: labor. The largest airlines lost about $9 billion last year, according to the Department of Transportation, as they struggled to adjust to fewer passengers and greater security challenges. Congress gave the industry $5 billion immediately after the terrorist attacks. But executives from two large airlines testified today before the Senate Commerce, Science and Transportation Committee that the industry might need an additional $4 billion to help it through its financial crisis. "We have the responsibility to right our own ship," said Richard H. Anderson, chief executive of Northwest Airlines, but "the reality is that there are significant security burdens," including the costs of installing stronger cockpit doors, as well as other costs that the airlines have incurred since the terrorist attacks. Stringent cuts and layoffs allowed Northwest to return to profitability in the third quarter, he said. Today's hearing was the first of several examining the problems of the industry and whether the federal government should extend additional financial assistance. Some lawmakers, including Senator John McCain, the Arizona Republican who is the new committee chairman, were reluctant to pledge any new money, even though they stressed that they wanted services to smaller cities to be maintained. Mr. McCain agreed with airline executives at the hearing that the industry's troubles were deeper than those of previous downturns and that structural changes were needed in an industry that is effectively two-tiered, including the bigger carriers and the smaller discount carriers. Mr. McCain is considering whether to reintroduce legislation that would set up an arbitration panel to quickly and definitively resolve airline labor disputes. His proposal would speed up the current process, which allows for lengthy mediation and the possibility of strikes. Mr. McCain's proposal would allow arbitrators to consider a carrier's financial condition, including a "reasonable profit," before making a decision after 30 days. The largest airlines want to see the legislation revived because they say the current process has led to an unsustainable level of wages and benefits. They have formed an organization to help shape a grass-roots campaign to win support for rewriting the airlines' labor rules. Mr. McCain's bill was not passed last year, but, if it was reintroduced, it could receive a more favorable response now that the Republicans control Congress. Donald J. Carty, chief executive of American Airlines, a unit of the AMR Corporation, said that revising the airline labor law "would not help us through the current crisis." But he called it a long-term tool to assist the airlines "once we get healthy, to keep healthy." Duane Woerth, president of the Air Line Pilots Association, which represents 66,000 pilots, told the committee that binding arbitration was unnecessary because there had been few strikes in the airline industry. Compulsory arbitration "would remove all collective bargaining rights," he maintained. "The current system produces contracts about 99 percent of the time, so we only have a strike every 10 years," Mr. Woerth said. Airlines favoring such arbitration maintain that the true figure is much higher: about 160 strikes in the last 50 years. Mr. Carty also said his airline would begin to re-examine its labor contracts, a process he hoped to start within 60 days. "It won't be easy because it involves changes, and changes our employees won't necessarily embrace," he said. http://www.nytimes.com/2003/01/10/business/10AIR.html?ex=1043208192&ei=1&en=0a5069611647bd3e HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company