Sources: Bush, House agree on airline bailout

Many U.S. airlines are cutting back flight schedules and laying off employees to make up for lost revenue after the terrorist attacks.

From Major Garrett
CNN White House Correspondent

WASHINGTON (CNN) -- The White House and the bipartisan House leadership have agreed on a $15 billion bailout for the airline industry that includes $5 billion in direct aid, $10 billion in loan guarantees, and much of the liability and insurance protection the industry sought, according to senior administration and congressional sources.

The agreement is only between the administration and the House. Negotiations continue between senior White House officials and Senate Majority Leader Tom Daschle, Minority Leader Trent Lott and other senators.

The deal between the White House and House contains these main provisions:

-- $5 billion in direct aid.

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-- $10 billion in loan guarantees that are to be distributed by a federal administrative board, which would have 14 days to review and respond to requests for loan guarantees.

-- Extension of so-called war risk insurance to the entire U.S. commercial airline industry for 180 days. The White House fought for this provision after appeals from the industry that its insurance premiums would be so high as to send many airlines into bankruptcy even with direct federal aid.

The last time the government provided insurance coverage for the airlines was during the Gulf War, when airlines that moved personnel and equipment to the Persian Gulf were insured. Under this provision, all commercial flights on U.S. carriers would be backed by government insurance.

-- Providing retroactive liability protection for American and United airlines, allowing lawsuits only for damages suffered by passengers and crew aboard the four hijacked airliners. There are no limits on liability exposure for passengers and crew, but the industry will receive protection from claims filed by those killed and injured on the ground in New York and Virginia.

The deal was sealed in a meeting between senior White House officials, House Speaker Dennis Hastert and House Minority Leader Richard Gephardt. House Republican leaders have ordered the Rules Committee to prepare the legislation for floor action Thursday evening. Floor action is expected Friday.

A senior administration official said he is hopeful the Senate will soon follow the House's lead.

Objections have been raised by some Senate Democrats to the liability protections provided the airlines. Also, Sens. Charles Schumer and Hillary Clinton, both New York Democrats, are pressing for a victims' compensation fund in the legislation.