Delta CEO Mullin Urges Congress to Act Swiftly to Stablize U.S. Airline Industry

Without immediate and significant U.S. government financial support, most of the airlines that make up the nation’s commercial air transportation system will go bankrupt, Delta Air Lines Chairman and CEO Leo F. Mullin told members of Congress Wednesday (19 September).

"We face an enormous problem with potentially devastating repercussions for our nation’s full recovery," said Mullin, testifying on behalf of the Air Transport Association and its member airlines before the House Transportation and Infrastructure Committee. "Under current circumstances and without immediate financial support from the government, a number of carriers could be driven to bankruptcy within 60 days and the future of aviation could be severely threatened."

Mullin asked Congress to help in the development and approval of a package of transition aid so that, as Transportation Secretary Norman Mineta said recently, "We do not allow the enemy to win this war by restricting our freedom of mobility."

Mullin told legislators that the several day shutdown of the airline industry, the projected long-term reduction in passenger demand and airline revenues, significantly increased costs. This, in addition to the consequences from the liability issues resulting from the events on September 11th, will generate crushing losses for the industry.

Passenger demand and associated revenue, Mullin said, is not expected to return to previously anticipated levels before the third quarter of 2002. The proposed government support package is valued at $17.5 billion, based on anticipated revenue declines and cost increases associated directly with the impact on the U.S. airline industry from the September 11th attack.

Although a handful of air carriers may be able to survive without government support, the vast majority of U.S. carriers have no means of obtaining the necessary cash to support continued operations, noted Mullin, even within the bounds of a Chapter 11 bankruptcy proceeding. Already, U.S. air carriers have taken steps to shrink in size and are expected to announce the layoff of more than 100,000 employees.

To forestall this, the airline industry is urging Congress to immediately adopt a package of cash grants and other measures. Mullin outlined the commercial aviation industry’s concept of a recovery program that would ensure the security, safety, and stability of this critical industry.

The program is composed of three components. The first addresses the financial underpinning required to maintain the industry’s capacity to serve. The second relates to the liability issues arising out of the tragic role cast on aviation in this brutal attack on America. The third deals with the need to provide resources for the enhanced aviation security programs which our nation is undertaking.

Mullin also reminded the House committee members that the U.S. commercial airline transportation system is vital to the U.S. economy. During calendar year 2000, U.S. commercial airline operations generated more than $30 billion in government revenues. During calendar year 2000, the 1.2 million U.S. airline employees served approximately 670 million passengers traveling over 700 billion miles and provided over 25 billion ton miles of freight delivery.

Although the terrorist attacks dealt a crippling blow to U.S. commercial airline transportation, Mullin told the Committee members that, "We are grateful for the opportunity to join you in the important work of rebuilding from this enormous tragedy, and just as importantly, the work of restoring our nation’s confidence."