US says war may hurt airlines, govt ready to help = = = = Tuesday March 18, 3:31 PM EST = By John Crawley WASHINGTON, March 18 (Reuters) - The U.S. government acknowledged on Tues= day that a war with Iraq could hurt the nation's airlines and said it was= ready to move quickly with assistance measures if necessary. "We will be ready to move very quickly if the need arises," Transportatio= n Secretary Norman Mineta told the Federal Aviation Administration's annu= al forecast conference. With a U.S.-led invasion of Iraq seen just days or even hours away, the F= AA offered an assessment more understated than the alarming scenario deli= vered by the industry last week, but it still saw war as one of the "grea= test risks" to recovery. A war could further dampen demand for travel and send fuel prices even hi= gher, after they more than doubled in the past year. = On Capitol Hill, Congressman James Oberstar, a Minnesota Democrat, plans = on Wednesday to introduce an airline aid bill that includes federal loan = guarantees to cover rising fuel prices. Lawmakers were quick to assist the airlines with $15 billion in cash and = loan guarantees after the Sept. 11, 2001, hijack attacks, but both Congre= ss and the administration have been mostly skeptical about additional han= douts. UAL Corp.'s (UAL) United Airlines and US Airways Group (UAWGQ) are alread= y operating under bankruptcy protection and the world's biggest carrier, = AMR Corp.'s (AMR) American Airlines, is trying to slash billions of dolla= rs in costs to stem losses. The leading association for the major U.S. airlines said last week that a= n Iraq war lasting 90 days could drive the industry's annual losses to $1= 0.7 billion, force more bankruptcies and cost 70,000 jobs. DAILY CONTACT Mineta said the administration was in daily contact with airline executiv= es. "The airlines are obviously very concerned about what may happen to the i= ndustry should hostilities occur in the Middle East," he said. "We too are focused on this very question, trying to ensure that we are p= repared for any outcome, while continuing to do everything we can to rest= ore economic viability to this very critical industry," Mineta said. In its annual forecast for the aviation industry, the FAA said a war with= Iraq could derail forecast recovery targets, which include a 2.3 percent= increase in domestic air traffic this year followed by a 4 percent jump = in 2004. "For some period of time, it would reduce passenger demand as well as dri= ve operating costs higher. In its current financial condition, this would= be difficult for the U.S. commercial aviation industry to absorb," the a= gency said. The FAA expects domestic travel to return in 2006 to the levels that prec= eded the 2001 attacks. International traffic is forecast to rise by 2.1 p= ercent this year and 3.4 percent next year. Both domestic and international air travel declined in 2002, and the indu= stry lost more than $10.5 billion. "The environment for recovery is uniquely poor," J.P. Morgan airline indu= stry analyst Jamie Baker told the FAA conference. At best, Baker saw 2 percent growth in airline revenues this year so long= as any war with Iraq is short and barring any terrorist attacks or furth= er huge spikes in oil prices. Another concern of regulators is the potential for dramatic industry cons= olidation if the airlines' financial problems worsen. "While consolidation may improve the financial health of individual carri= ers and the industry, the fear is that (it) could lessen competition in m= any markets," the FAA said. "Less competition could mean higher fares and= lower travel demand." In addition to the uncertain outlook for United and US Airways, four smal= ler airlines have gone out of business since the Sept. 11 attacks acceler= ated an industry downturn into its worst-ever financial slide. After the 1991 Gulf War, three struggling airlines, Eastern, Midway and P= an American, ceased operations. (Additional reporting by Peter Kaplan) = =A92003 Reuters Limited. = Roger EWROPS