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Airlines begin receiving federal bailout money

WASHINGTON (CNN) -- The nation's airlines -- nearly crippled by a two-day shutdown in the wake of the terrorist hijackings and the lack of passengers returning to air travel afterward -- have begun receiving the first payments from a federal financial assistance package.

A Continental Airlines spokeswoman said the airline has been able to stave off bankruptcy only because of the millions it has received from the federal government as part of the package.

"Continental's viability is (now) not at risk because of the financial relief provided by the Airline Stabilization Act," said Continental spokeswoman Julie King. During his visit to Washington last week, Continental CEO Gordon Bethune said his airline was weeks away from bankruptcy unless Congress approved a bailout plan.

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The spokeswoman said the airline received $212 million -- half what it expects from the rescue package -- Thursday.

American Airlines received its first payment of $359 million Friday, according to spokesman John Hotard. It expects to receive $900 million total.

The payment came on the same day American announced it is beginning its previously announced release of about 20,000 employees -- 15,000 at American, 3,000 at TWA and 1,700 at American Eagle, across all of the work groups. Notices were also given Friday to 1,400 management and support staff.

Hotard said the cash payment allows American to offer laid-off employees severance pay, medical benefits, travel, and special payments.

American Airlines CEO Don Carty told employees in a statement Friday that American is still fighting for survival.

"The losses we face are truly staggering. They exceed anything we ever imagined at American. Right now it is survival, not profitability that is our core challenge," Carty said.

Northwest Airlines said it received $230 million Thursday, half of what it's expecting. A spokesman said the airline is also eligible for some additional money for its cargo operations.

Delta said the federal government gave it $327 million Thursday. Southwest also received its money Thursday.

"We're pleased that Southwest Airlines received its first federal installment of $144 million to compensate for direct losses from the terrorist attack," A Southwest spokeswoman said.

United Airlines received $400 million Friday, according to a spokeswoman. At the same time, the airline said it will further reduce its flights -- dropping from 80 percent of pre-September 11 levels to 74 percent beginning November 1.

A spokeswoman said the Federal Aviation Administration also told United it could resume curbside check-in again under new security measures put in place. The airline's curbside check-in resumed Friday at Chicago O'Hare and Washington Dulles Airport for the first time since September 11.

Other airlines will be allowed to resume curbside check-in as they meet security requirements, the FAA said.


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