WASHINGTON, Sept 24: The chief executive at the world’s biggest airline warned Congress on Tuesday the industry could come close to collapse if it did not receive government help to reduce taxes and other costs related to aviation security.

“Without relief, our efforts to control our own costs will likely be futile,” Donald Carty, chairman and chief executive of American Airlines told the House of Representatives aviation subcommittee.

“Failure of government inaction will surely keep our industry on the edge of collapse,” Carty said. Specifically, he said that more bankruptcies, layoffs and route cuts “would most surely be on the horizon” without relief.

He also warned that any U.S. war with Iraq was a “financially chilling” prospect because of the potential for higher fuel costs and weaker demand, and could aggravate industry problems and push more carriers into bankruptcy.

“Such an event really would put a financial burden on this industry that would inevitably sink several carriers,” Carty said.

Carty and Leo Mullin, chairman and chief executive of No. 3 Delta Air Lines Inc. , told lawmakers the impact on the airlines of aviation security in direct expenses and lost revenue will total roughly $4 billion in 2002.

“That’s a staggering number,” Mullin said.

He added the figure could account for 35 percent of the industry’s pretax operating losses for 2002.

Carty and Mullin stressed that increased aviation security is a national security priority and should be funded by the government.

The government has paid more than $6 billion since the Sept 11, 2001, attacks on the World Trade Center and the Pentagon to overhaul aviation security, including new passenger and baggage screening operations at more than 429 commercial airports.

But the executives said expenses and lost revenue related to what they called “well intentioned” initiatives have aggravated overall industry financial weakness and plunged many airlines into crisis.

Major airlines lost $7.7 billion last year and Wall Street estimates show they could lose between $5.7 billion and $7 billion in 2002 and up to $3.3 billion in 2003.

“Just to survive day-to-day, airlines have had to take on massive debt and as a result, our balance sheets and credit ratings are deteriorating rapidly,” Carty said. “In fact, the average U.S. carrier is 90 percent leveraged.”

One airline, US Airways Group Inc., is in bankruptcy protection and another, United Airlines , may go that route this quarter.

Mullin said the “hassle factor” of lengthy airport security procedures imposed since the attacks has driven passengers away, especially on flights of 300 miles or less. “We are losing it to a brand new competitor, the automobile.”

The industry asked Congress to eliminate the security tax of up to $10 per round trip assessed on tickets last spring; provide terrorism liability insurance coverage for up to one year; authorize airlines to carry U.S. priority mail; obtain reimbursements for mandates like cockpit door improvements; eliminate monthly security fees paid to the Transportation Department; and give that agency the flexibility to change the process for screening checked bags to make it more customer focused and cost efficient. “We are not asking for special treatment,” Mullin said.—Reuters