Bush wary about big airlines bailout

(CNN) -- President Bush wants Congress to grant airlines about $5 billion in immediate emergency aid and then revisit the issue later of whether the industry needs billions more in loan guarantees and other federal help, administration and congressional sources said Wednesday.

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The strategy took shape after an Oval Office meeting at which Bush and congressional leaders from both parties agreed on a three-pronged, short-term legislative response to the terrorist strikes:

-- The first installment of relief for the airline industry.

-- Action on new anti-terrorism powers requested by the Justice Department.

-- Debate on an emergency economic stimulus plan.

As for the airline bailout, the industry raised eyebrows among some in Congress and throughout the White House economic team by initially asking for a $24 billion package of direct aid and loan guarantees. That was later scaled back to $17.5 billion.

A House panel held a seven-hour hearing Wednesday on the airline industry's financial crisis.

Delta Chairman and CEO Leo Mullin told members of the House Transportation Committee the airlines could see up to 100,000 layoffs by the end of this week if help from Congress is not forthcoming.

Mullin told the panel the airlines had lost $1.36 billion in the four days they were forced to stop or reduce service after the terror attacks.

Using optimistic projections, Mullin said, the industry would expect to lose another $3.36 billion by September 30.

The airline industry, Mullin said, is also asking the federal government to provide financial support for all mandated safety requirements, including reinforcement of cockpit doors and screening devices.

The industry also wants the government to provide sky marshals on domestic flights.

He said that if Congress did not give the airlines a shield from liability for terrorist attacks, their premiums for war risk insurance could jump by $1 billion.

United Airlines and American Airlines, whose planes were used in the September 11 hijacking attacks, announced Wednesday they would each lay off 20,000 workers.

United said its flight schedule had been reduced by 20 percent since the attacks.

The Boeing Co. said Tuesday it would reduce its workforce by 20,000 to 30,000 people nationwide by end of 2002 at its commercial aircraft division and shared services division.

Continental Airlines said it is cutting 12,000 jobs, U.S. Airways said it expects to lay off 11,000 employees. Sources with Northwest Airlines said they plan to announce layoffs in the coming week.

Continental chief executive Gordon Bethune said in a joint news conference with House Minority Whip Tom Delay the industry was losing $15 million per hour.

Delay said he would introduce the bailout measure this week and urged the Senate to take quick action so the bill could be on the president's desk by the end of the weekend.

-- CNN Senior White House Correspondent John King, Congressional Correspondent Kate Snow and producers Dana Bash and Tory Flowers contributed to this report.