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US Airways Fights Delay of Loans

Washington Post

US Airways officials warned lawmakers this week that the company may go bankrupt this summer if Congress adopts language suspending the loan-guarantee program it established for the airline industry last year.

House Republican leaders inserted the provision, which would halt any bailout payments on guarantees between the time the legislation takes effect and Oct. 1, as a way to offset some of the cost of a $29.4 billion emergency defense bill.

With some carriers accessing the capital markets without a government guarantee, insiders familiar with the program say lawmakers are less willing to put taxpayer money into the $10 billion program, which was designed to help struggling airlines borrow private-sector money after the Sept. 11 attacks hobbled the industry.

Rep. James P. Moran Jr. (D-Va.) said he had been engaged in lengthy talks with representatives from the Arlington-based airline about the need to preserve the loan guarantees.

US Airways spokesman David Castelveter declined to comment on the airline's lobbying efforts but said the carrier was "opposed" to the legislation. But several lawmakers said the executives were gravely worried about the measure's impact on struggling carriers such as US Airways. It could come up for a vote as early as today.

US Airways has said it planned to apply for $1 billion in loan guarantees. Earlier this month, executives said if the airline did not receive the loan guarantees, in addition to wage and benefit concessions from its employees, it might seek bankruptcy protection.

"The management team will not take the company into the latter half of the year without sufficient cash as determined by the corporation," Castelveter said.

But several Wall Street airline analysts suggested that US Airways could survive financially through October without the loan guarantee. That is because the airline industry is now entering its strongest period, the summer travel season.

"Any potential delay in loan-guarantee disbursement shouldn't be a major problem for US Airways," said UBS Warburg airline analyst Sam Buttrick. "The much more important question is: Will US Airways succeed in getting the sought-after labor concessions?"

The airline industry lost more than $7 billion last year, and all of the major airlines but one -- Southwest -- reported losses in the first quarter.

Several signs have emerged that investors are willing to put money into the airline industry. In April, the start-up JetBlue Airways raised $158.5 million, a record for a public offering this year. Also earlier this year, Northwest Airlines issued $300 million of unsecured notes and refinanced its debt.

Joseph P. Adams Jr., former executive director of the Air Transportation Stabilization Board, which grants the loan guarantees, cited Northwest and JetBlue as a "sea change" in attitude among the capital markets. "The program did do a lot to achieve its goal in helping the airlines to transition to the new world and be able to raise capital," Adams said.

But one source close to the board said the need for the program "has less importance" if carriers can borrow elsewhere. "There's clearly going to be a fewer number of carriers that would access the program than people actually thought," the source said.

Both United Airlines and Northwest Airlines said they were examining whether to apply for the loan guarantees before the June 28 deadline. America West is the only airline to have been awarded a loan guarantee thus far; five smaller carriers have applications pending.

No one is suggesting the loan guarantee program is in any danger of being abandoned, especially with only a month left before all applications are due. A spokeswoman for the loan-guarantee board said its members "continue to work diligently to complete its task at hand."

Republican leaders had told Moran he could offer an amendment stripping the provision from the bill. But faced with an outcry from conservatives over the cost of the measure, Republicans opted to retain the language, which would save the government roughly $400 million in guarantees and $250 million in grants.

Rep. Sue Myrick (R-N.C.), whose home city of Charlotte serves as one of US Airways' hubs, said she hoped lawmakers could resolve the impasse without scuttling the bill.

"It's important to US Airways, and it's important we solve the problem," Myrick said.

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Tethered Janitors Had Escorts

Detroit Free Press

At a time of intense scrutiny of security at the nation's airports, Northwest Airlines had to assign dozens of employees to escort janitors at Detroit Metro Airport because the janitors did not have security clearances.

Some of the janitors appeared to have criminal pasts.

Northwest acknowledged Tuesday that it assigned up to 30 employees per day to escort janitors at the midfield terminal because the cleaners had not undergone 10-year criminal background checks needed to obtain airport security badges.

The airline said it gradually reduced the number of escorts and ended the practice Friday after more than two months.

"They were no longer needed," spokeswoman Mary Beth Schubert said.

She declined to elaborate.

Northwest employees who escorted the janitors said they saw up to 10 of the cleaners wearing electronic ankle tethers -- indicating they were being monitored for offenses. Several janitors admitted having committed crimes, the escorts said.

"I believe there were people on the property who were convicted of felonies who were escorted by Northwest Airlines," said Al Wojcik, district chairman of the International Association of Machinists.

The union represents Northwest baggage handlers, ticket counter agents and aircraft cleaners. The airline assigned dozens of the employees to work as escorts, sometimes at time-and-a-half or double-time pay, union officials said.

Schubert declined to say how much Northwest paid employees to serve as escorts. Airport officials declined to say whether background checks conducted by the FBI had uncovered felons working at the terminal as janitors.

Federal law prohibits airports from issuing security badges to most felons, if they were convicted after Dec. 6, 1991, said a spokeswoman for the Transportation Security Administration, the agency created after the Sept. 11 terrorist attacks.

But felons may work in areas beyond airport security checkpoints, if they are escorted.

"It is not illegal for them to be working there as long as they do not have unescorted access to secured areas," agency spokeswoman Deirdre O'Sullivan said.

But Mary Schiavo, a former Department of Transportation inspector general, said employing criminals as airport janitors defies common sense.

"When you've got a chain gang in an airport, it's a pretty bad situation," said Schiavo, author of the 1997 book "Flying Blind, Flying Safe."

Northwest was forced to begin the escorts days after opening the 97-gate midfield terminal on Feb. 24.

On Feb. 26, Johnson Controls Inc., the Milwaukee company Northwest hired to manage operations at the midfield terminal, fired Preferred Building Service, the Detroit company that was awarded the cleaning contract. The firing came after Preferred laid off 126 union employees because they refused to accept a 25-percent pay cut and loss of seniority and benefits.

Faced with cleaning the 2-million-square-foot complex, Johnson hired more than six janitorial companies on a temporary basis, said Renee Jennings, Johnson's Michigan area general manager.

The cleaning companies rushed in crews of temporary employees who had not undergone the federally mandated background investigations needed to work in high-security areas.

On May 1, Coyote Cleaning Inc. began cleaning the midfield terminal under a 3-year contract with Johnson. The Romulus company is owned by Vince Hebel, who also owns Roadrunner Maintenance, which had been one of the companies cleaning the terminal.

A Northwest baggage handler said he was escorting janitors on March 3 when he noticed something unusual about one of the cleaners.

"I just happened to notice this sort of bulge on his ankle," said the baggage handler, who asked not to be named because he fears losing his job. "At first, I wondered whether he had a gun. So, I go, 'Is that a tether you are wearing?' and he said, 'Yeah, I got into a jam.' I didn't pursue it any further. It was none of my business."

A baggage handler crew chief who served as an escort said he saw up to 10 janitors wearing electronic ankle tethers. When a few of the janitors inquired about airline jobs, the crew chief said he told them they would have to pass a 10-year criminal background check.

"Some of them would tell me 'I had a felonious assault' or some would just tell me 'I have a felony charge so that would wipe me out,' " said the crew chief, who also asked to remain anonymous for fear of losing his job.

Northwest, the nation's fourth-largest carrier, said it received one report of a janitor wearing an ankle tether.

"Months ago, it was reported after the fact that an employee was wearing an ankle tether, but we were never able to confirm that," Schubert said.

But Coyote Cleaning's Hebel acknowledged that one of his crew supervisors at the midfield terminal wears an ankle tether. The supervisor is required to wear the tether because his driver's license was suspended, Hebel said.

Hebel said he had heard about employees of other janitorial companies at the midfield terminal wearing tethers. "There was definitely an issue with the tethers," he said.

In Michigan, a person convicted within 7 years of driving without a valid license a third, fourth or fifth time must wear an ankle tether for up to 3 years.

About 75 percent of Coyote's 122 janitors have received airport security badges after undergoing the FBI criminal history check, Hebel said. The FBI has not completed checks on the other 25 percent.

Three Coyote janitors have been disqualified for airport security badges as a result of the FBI criminal background checks, Hebel said.

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Post Sept. 11 trans-Atlantic air traffic down 22.6 percent

Associated Press

BRUSSELS, Belgium -- Scheduled air traffic between the United States and Europe is down 22.6 percent for the period since the Sept. 11 terror attacks compared to a year earlier, the 28-member Association of European Airlines said Tuesday.

But traffic across the North Atlantic key to the financial health of major airlines was slowly approaching earlier levels, according to association figures.

In the last quarter of 2001, traffic on North Atlantic routes was off by almost 31 percent compared to the same period in 2000, the association said. Since Jan. 1, the decrease narrowed to 14.9 percent, the AEA said.

In the week ending May 12, the last for which the association had figures, traffic was off by 10.1 percent compared for the same week the year before.

Traffic on routes within Europe has fallen by 8.6 percent, the AEA said in its weekly traffic update.

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