Should Gov't Stop Bailing Out Airlines?

ByABC News
December 3, 2004, 7:39 AM

Dec. 4, 2004 — -- When the nation's biggest airlines were reeling after 9/11, the government bailed them out, with $15 billion in cash and loan guarantees.

When they continued to lose billions for the next two years, the government came through again, with $3.5 billion in tax breaks, and an $800 million loan guarantee for US Airways, which soon went into bankruptcy for the second time.

Now, the airlines are reeling again, with $840 million in losses last quarter alone following a huge run-up in fuel prices.

Kevin Mitchell of the Business Travel Coalition says the time for rescues is over.

"The last thing that the government should do is delay the day of reckoning any further," Mitchell says. "They need to stand firm and have the airlines solve their own problems.

Their problem is how to compete against low-cost carriers like Southwest and JetBlue, with newer fleets and no unions.

"For those carriers that continue to delay the serious and deep restructuring, they're going to fail," Mitchell says.

American, US Airways and Delta are now trying to avoid failure by squeezing hundreds of millions of dollars in wage and benefit concessions from their workers. United is asking a bankruptcy court to do that work. But it may be too little, too late.