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House and Senate appropriators this week agreed that if
airlines want federal assistance, they will need to go further to clean up
their own in-house expenses. Both chambers yesterday passed airline
assistance packages as part of the President’s war supplemental, but with
the caveat that executive compensation must be capped at 2002 levels. The
House is scheduled to take up the supplemental today and the Senate was
scheduled to debate it yesterday with resolution expected tonight.
Appropriators granted airlines — and the Senate included airline workers —
more than $3 billion in federal relief.
The House passed a straightforward $3.2 billion package
that included an amendment introduced by Rep. Martin Sabo (DMinn.),
ranking member on the homeland security subcommittee, that caps executive
benefits at 2002 rates for airlines seeking federal assistance. Appropriators
agreed airlines should report how they’re spending the aid money. Rep.
Philip English (R-Pa.) yesterday introduced a bill to extend unemployment
benefits for laid-off airline workers similar to the one approved by Senate
appropriators. Minority Whip Rep. Steny Hoyer (D-Md.), a co-sponsor, said
he wanted it included in the supplemental.
In the Senate, a compromise package delivered by
Appropriations Chair Ted Stevens (R-Alaska), and Patty Murray (D-Wash.),
ranking member on the Transportation Committee, also put a lid on executive
compensation. The amendment suspends the security fee from April 1 through
Sept. 30 and extends war risk insurance for one year. It also reimburses
airlines $1 billion plus $100 million for cockpit door hardening, $375 million
for operating and capital costs and extends for 26 weeks unemployment
insurance for laid-off aviation workers. Anger that re-emerged last week
over the continued doling out of airline executive bonuses at a time of
massive layoffs and requests for federal aid led to a bipartisan agreement
on amendments to limit airline executive compensation. Sabo said Delta
executives were paid “more than $17 million in total compensation in 2002
while the airline was losing $1.3 billion. The airline’s CEO, Leo Mullin,
received almost $13 million, while 16,000 employees lost their jobs.”
Lobbyists say they are not surprised at the growing backlash.
Once the industry held out its hand and got federal money
the government became “ex officio stockholders,” one lobbyist told The
DAILY. Executive compensation, along with management practice and corporate
governance, became fair game. Airlines overused their welcome, he said.
Airline management “may have anticipated strings attached to another
financial relief package, but I doubt they anticipated Congress would put a
noose around their future earnings,” one Capitol Hill source said, noting
they “shouldn’t be surprised. When you have industry executives making 50
to 100 times more than the members of Congress they are shaking down for
financial relief, a condition restricting executive compensation should
have been expected.” Sabo pointed to Continental CEO Gordon Bethune’s
compensation package as one example that has lawmakers taking notice. He
said Bethune “got a total cash-stock package valued at $11.9 million in 2002,
more than twice what he received in 2001 — while the airline’s 2002 losses
were $451 million.” “Call this our homeland coalition of the willing,”
Sabo said. “When the airlines are cutting employees and flights, the
executives should agree to reduce their compensation as well — particularly
as a fair price for the $3.2 billion airline aid contained in this bill.”
U.S. Department of Commerce Secretary Don Evans said
Tuesday he was surprised by the amount of aid appropriators approved for
the industry, noting he would work with Congress before the supplemental
was complete to come up with more “reasonable assistance.” Yesterday,
Senate Minority Leader Tom Daschle (D-S.D.) said he felt the package was
appropriate and he would support it “as part of a larger package.”-DM
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