NYTimes.com Article: Travelers' Group to Ask for Airline Failure Contingency Plan

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Travelers' Group to Ask for Airline Failure Contingency Plan

October 12, 2004
 By MICHELINE MAYNARD





A group representing business travelers is expected to ask
Congress today to draft plans in the event that several
major airlines are forced to liquidate.

The Business Travel Coalition said in a statement that the
country must be prepared for a "catastrophic failure" of
the industry and urged lawmakers to authorize the National
Academy of Sciences to develop policies that could be put
in place should the industry reach such a crisis point.

Without action now, the federal government could be
overwhelmed by the demands of airlines, their unions,
investors, airports and others affected by the industry's
crisis, said Kevin P. Mitchell, chairman of the group,
which represents corporate travel departments and
travelers.

He noted that half of the traditional airlines could be
operating under bankruptcy protection within a month, and
the level could increase to 70 percent by the end of 2005.

US Airways and UAL Corporation's United Airlines are
already bankrupt, and Delta Air Lines could file for
Chapter 11 as soon as this month unless it is able to slash
its costs and repair its balance sheet quickly. Analysts
say other airlines could be forced to seek bankruptcy to
reduce wages and benefits to levels achieved by their
rivals.

"There is increasing probability that the U.S. airline
industry, a critical infrastructure for our country, will
experience a catastrophic failure in the next 12 months"
should two or three airlines liquidate, Mr. Mitchell said.

While he thought the market place would adjust to a loss
of airlines, he said others had much to lose, including
local communities, employees, pension funds and other
industries like rental cars and hotels.

"The larger danger," he said, "is that the federal
government would be caught off guard without well conceived
and vetted contingency plans and policy options in such a
crisis."

http://www.nytimes.com/2004/10/12/business/12air.html?ex=1098590610&ei=1&en=d0669eb092e4c5bf


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