"FAA keeping close eye on struggling air industry"

Tuesday, October 8, 2002

FAA keeping close eye on struggling air industry
By John Crawley


WASHINGTON, (Reuters) - The nation's chief air safety regulator on
Tuesday promised vigilant oversight of struggling airlines as they
wrestle to cut costs and survive the industry's worst-ever financial
downturn.

Marion Blakey, speaking to reporters after delivering her first public
remarks as administrator of the Federal Aviation Administration, said
her agency is sympathetic to the industry's plight.

"We do understand right now the industry has terrific economic pressures
on it and it is critical that maintenance not in any way be cut short,"
Blakey said after addressing an aviation forum at the U.S. Chamber of
Commerce.

But Blakey, who left her post as chairman of the National Transportation
Safety Board to take the FAA post, said her agency must "look very
carefully" at not placing new regulatory pressure on carriers that could
"unintentionally" increase costs.

Almost all regulatory action cost airlines or manufacturers money. In
the past week, the FAA announced new rules to make certain aircraft
rudders and passenger seats safer at a combined cost to the industry of
nearly $1 billion over several years.

"We have to be balanced in our approach but it is absolutely critical
that we continue our oversight, we continue the kinds of inspections, we
continue the role the FAA does play in ensuring the safety of the
system," Blakey said. "We are going to be vigilant."

Delta Air Lines (DAL) chief executive Leo Mullin told the Chamber of
Commerce audience of aviation business executives that airline industry
pretax losses could top $8 billion in 2002.

The biggest airlines lost almost that last year, hit by the two
successive blows of recession and of Sept. 11, 2001, hijack attacks.
Lucrative business travel has declined precipitously while airlines
costs have risen steeply because of new security demands.

"We're gradually going out of business," American Airlines (AMR) Chief
Executive Don Carty told the forum about the impact of cost pressures.
"We're borrowing money to operate."

Carty and Mullin lobbied lawmakers again on Tuesday to approve measures
that would ease some of the industry's $4 billion in security-related
expenses. Legislation is moving through Congress to do that.

One carrier, US Airways (UAWGQ), has filed for bankruptcy and another,
United Airlines (UAL), has said it might do so before the year is out.

The FAA automatically steps up oversight of carriers when they enter
bankruptcy court.

One senior official said this could include closer scrutiny of aircraft
maintenance staffing, the frequency of aircraft safety checks and costs.
The agency also would look at aircraft age and safety trends, like
engine or other equipment problems.

The industry maintains that its fleet is safe. Struggling airlines say
that any cutbacks in maintenance staff or other cost savings must be
measured against a reduction in operations.

For instance, US Airways will have furloughed 423 maintenance-related
employees by year's end. But the carrier has also reduced its fleet from
417 planes to 301 and cut flights from roughly 4,480 to 3,700 on its
mainline and express services since last Sept. 11.

Many of the planes US Airways has idled have been older jets that
required more maintenance than newer models it currently flies.

United has also furloughed some maintenance workers but has also cut
flights from 2,400 per day before last Sept. 11 to 1,900 now.


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