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GAO-02-133R 1 (2001-10-05)

handle is hein.gao/gaocrptanub0001 and id is 1 raw text is: G A O Comptroller General Accountability * Integrity * Reliability of the United States United States General Accounting Office Washington, DC 20548 October 5, 2001 Congressional Requesters Subject: Financial Management: Assessment of the Airline Industry's Estimated Losses Arising From the Events of September 11 In the wake of the September 11, 2001, terrorist attacks on the United States, the airline industry' has estimated significant losses resulting from the temporary shutdown of the nation's airspace and the severe drop in passenger traffic since the attacks. In response, on September 22, 2001, the President signed the Air Transportation Safety and System Stabilization Act,; which provides $5 billion in emergency assistance to compensate the nation's air carriers for these losses. Specifically, the law stipulates that an amount equal to $5 billion will be made available to compensate air carriers for direct losses incurred beginning September 11 as a result of any federal ground stop order issued by the Secretary of Transportation, and incremental losses incurred beginning September 11 through December 31, 2001, as a direct result of the terrorist attacks. Additionally, the law allocates the $5 billion between passenger-only or combined passenger and cargo carriers (passenger carriers) and cargo-only carriers (cargo carriers) and establishes a maximum level of compensation for each class of carrier. Passenger carriers were allocated $4.5 billion while cargo carriers were allocated $.5 billion. The law also directs that the maximum amount of compensation paid to each carrier may not exceed the lessor of (1) its allocated share of the $4.5 billion (passenger carriers) or $.5 billion (cargo carriers) or (2) the actual direct and incremental losses incurred by the carrier as a result of the September 11 terrorist attacks. In letters dated September 26 and 27, 2001, you asked that we (1) perform an analysis of the data and methodologies used by the airline industry to estimate the losses through December 31, 2001, stemming from the terrorist attacks to determine whether there is a reasonable basis for the estimate and (2) assess the overall reasonableness of the $5 billion compensation package. This letter summarizes the information we provided during our September 28, 2001, briefing pursuant to these requests. The briefing slides, which provide more details about our analysis, are attached. 'The airline industry estimates were prepared by the Air Transport Association, a trade organization representing the principal U.S. airlines. 'Public Law 107-42. GAO-02-133R Airline Industry Emergency Assistance

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