Wednesday, September 26, 2001 It's All About Security By BARBARA NAGY And MICHAEL REMEZ The Hartford (CT) Courant It will take another month or more to evaluate how Pratt & Whitney's jet-engine business will be affected by the crisis facing the airline industry, company officials told union leaders Tuesday. The company couldn't offer any estimate of how the problem will affect employment, company spokesman Mark Sullivan said after executives met with members of the Machinists union. Union officials went into their own meeting after the session with Pratt executives, and did not return calls seeking comment. Sullivan said the company and union, which represents 5,000 hourly workers at Pratt, meet regularly, and will continue to discuss the situation. In the meantime Tuesday, the president of Pratt's small-engine division in Longueil, Quebec, told a Montreal newspaper that employment at his unit would be cut by 600. That amounts to about 7 percent of the work force. And in Washington, two congressional committees had hearings on the status of the U.S. aviation system. Testimony on Capitol Hill made clear that the airlines' pain is shared by a host of related industries, including the aerospace suppliers, airport operators and the general aviation business. At stake are many thousands of jobs, and a critical piece of the nation's economy. In Connecticut, the work of hundreds of suppliers is linked to Pratt's business. The first step in a solution, lawmakers said, was to find ways to make people feel comfortable flying again. They heard from witnesses Tuesday about the need to federalize the entire airport security system, the possibility of pilots carrying guns to safeguard their cockpits, specially designed cockpit doors, and other steps intended to reduce the possibility of more hijackings. Rebuilding public confidence is crucial, Sen. Joseph I. Liberman, D-Conn., told the Senate Governmental Affairs Committee. Lieberman, chairman of the committee, called a $15 billion airline package that was approved last week "just the beginning of a response to the financial problems facing this industry," and he said more had to be done. "Unless we can also rebuild confidence in the safety of our skies," he said, "the impact on air commerce - already hard hit by the economic slowdown - will have a ripple effect on jobs, spending, and investment at every level and in every sector of our economy for years to come." By some estimates, air travel has fallen 40 percent or more since Sept. 11, when hijackers commandeered four U.S. aircraft for attacks on Washington and New York. Air travel was already weakening because of the soft economy; fear of flying has aggravated the problem to the point that Congress passed a $15 billion bailout for the airline industry last weekend. The decline has accelerated anticipated job losses at airlines, and at companies that build jetliners and components for them. The Boeing Co., the world's largest plane maker, said last week that it will eliminate as many as 30,000 jobs. Industry analysts hope the bailout will prevent the wholesale cancellation of orders for new aircraft. But cuts in service still hurt manufacturers because airplanes need less maintenance when they aren't flown as much. Several airlines are also planning to accelerate the early retirement of older aircraft, many of them powered by Pratt engines. That cuts into spare parts sales, a major driver of profits. Almost all of the 111 aircraft US Airways is retiring when it ends its MetroJet service later this year, for example, have Pratt engines. "That's one of the concerns, and one of the issues we're trying to understand, not just with US Airways," Sullivan said. Some of the aircraft might be sold to other airlines, but they probably would not be flown as much as they are by US Airways. "We don't know what's going to happen to them next, or where they're going to go," Sullivan said. He said that until that information is known, the effect on Pratt's business can't be gauged. He said Pratt is talking daily with airlines about their plans for their fleets. Sullivan said increases in military engine assembly - Pratt just won a $220 million contract for 20 additional F-22 fighter engines - should mitigate declines in the commercial business to some extent. Jeffrey Immelt, chairman of General Electric Co., a Pratt competitor, told analysts in a meeting on Sept. 21 that GE's commercial engine shipments will be down 25 percent this year, and that spare parts sales will be off 5 percent. He said GE is in good shape because it is on newer aircraft that will remain in service. Attached Photo: With smoke still rising in New York four days after the terrorist attack, a Continental jet takes off from Newark's airport. Continental's troubles could affect Pratt & Whitney.