EU ministers differ on airline bailouts

Robin Pomeroy, Reuters, Luxembourg

European Union transport ministers looked set to clash on Tuesday over how far governments should intervene to help airlines hit by the industry crisis caused by the Sept. 11 U.S. attacks.

The crisis was set to dominate discussions at the ministers' meeting in Luxembourg, where they were discussing a limited state aid package proposed by the European Commission last week.

The EU's executive arm has said there is no European money to hand to airlines, despite a US$15 billion package hastily put together by Washington for U.S. carriers.

It also insisted the hijack attacks should not be used as an excuse for EU member governments to bail out airlines already in trouble.

Aid should be limited to compensating for losses incurred during the four days after Sept. 11 when U.S. airspace was closed, paying for extra security, and higher war risk insurance, the Commission said.

But some countries will ask the Commission for more scope to help their airlines.

French Transport Minister Jean-Claude Gayssot said on Monday the French airline sector would receive aid totaling some two billion French francs ($276 million) -- half from the state and half from increased airport taxes.

He told reporters the compensation period should be extended from four days after Sept. 11 to about one week.

A Commission source said Ireland, whose flag carrier Aer Lingus announced massive job cuts last week, would also ask for more state aid.

And the Commission is also due to decide on Wednesday whether to approve a 125-million-euro ($113 million) government loan to Belgium's Sabena amidst cries of protest from rival airlines who would rather see the Belgian national airline collapse.