Senate approves $15 billion airline bailout
By Kate Snow, Ted Barrett and Dana Bash
WASHINGTON (CNN) -- In the wake of last week's terrorist attacks involving hijacked airplanes, the U.S. Senate passed sweeping legislation Friday to aid the crippled airline industry and set up a government compensation fund for victims to help deter lawsuits.
By a vote of 96-1, the Senate approved $15 billion in financial aid for the airline industry -- $5 billion in immediate cash assistance and $10 billion in loan guarantees -- in an effort to keep several major carriers from collapsing.
Sen. Peter Fitzgerald, R-Illinois, was the only senator to vote against the bill.
Senate and House leaders on both sides of the aisle worked with the White House into the night Thursday and all day Friday to bring the bill before Congress with almost unprecedented speed -- despite concerns on all sides about a variety of issues.
The House is debating an identical bill and is expected to vote later Friday night.
Many senators raised concerns about bailing out an industry that already had financial problems and questioned why the airlines, not other industries, were receiving taxpayer dollars.
"I think this assistance is too generous, it gives too much money," said Fitzgerald, who, like some other Republicans, openly worried that the bill was being passed too fast.
But other senators argued that saving the airline industry has a ripple effect that helps the whole economy.
"If planes don't fly, the whole economy shuts down," said Sen. Jay Rockefeller, D-West Virginia.
Many senators voted for the bill because of last-minute additions forcing airlines not to shut down business in small communities and a provision to allow the government to receive airline stock options as collateral for the loan guarantees.
Compensation for victims' families
In addition to the money for airlines, the package includes an ambitious plan for compensating families of victims in the September 11 attacks. Rep. Roy Blunt, R-Missouri, said it was like nothing ever tried before.
Under the legislation, the families of those killed at the World Trade Center, Pentagon and Pennsylvania sites where terrorists crashed airliners last week, along with those who were injured in the crashes, would have two options: They could decide to forgo the right to sue the airlines and instead go to a government fund for compensation, or they could sue.
If they opt into the government fund, the amount of money they eventually receive would be determined by a "special master" appointed by Attorney General John Ashcroft.
That determination must be made within 120 days of filing the claim. A payment would be made within 20 days after that.
The special master would decide what would be fair compensation and move quickly to pay it. Congress would not limit how much the special master could pay out.
If victims sue in court, there would be predetermined limits on how much money they could receive.
"They can choose one way or another," said House Speaker Dennis Hastert, "but there is a limited amount of money, a pot of money, to sue to get any relief."
The "pot of money" available to those who file lawsuits in court would likely equal the amount of insurance coverage carried by airlines involved when the attacks occurred. That would include American Airlines and United Airlines but could also include insurance carried by airlines that ran connecting flights to those that crashed.
There are advantages and disadvantages to choosing either the victims fund or going to court, congressional aides explained.
Opting for the victims fund might prove easier. Families could avoid a potentially long trial and an uncertain outcome. But there would be a formula used to determine how much a victim would receive, based on that person's income and possibly on the amount of insurance the victim carried.
Going to court would be risky, but victims could end up receiving more money if a jury is sympathetic. On the other hand, a jury trial could take a long time and the airlines could be bankrupt -- or at least out of insurance money -- by the time a trial ended, according to congressional aides.
Hastert, R-Illinois, explained the approach being taken by Congress as a tradeoff.
"What we're trying to do is lift the airlines out of that liability issue so they can get insurance, they can go fly, they can do their work. And we're afraid they couldn't get insurance unless we intervened."
The bill also contains a measure limiting salaries for airline executives.
In exchange for accepting the government's money, airlines would not be allowed to give a raise for the next two years to any executive who made more than $300,000 in the year 2000.
It also limits the "golden parachutes" available to retiring executives to twice their salary in the year 2000.
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