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American Morning

America's New War: Fix on What Markets are Doing Today; Airlines Pleading for Help

Aired September 18, 2001 - 10:01   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Let's check in with Andy Serwer of "Fortune" magazine to get a fix on what the markets are doing today. Not the roller coaster ride at this hour that we saw yesterday. Tell us where the markets are.

ANDY SERWER, "FORTUNE" MAGAZINE: That's right. The Nasdaq is up about 11. The Dow is down about 12. I think there has got be a great sense of relief with those numbers that we're not either radically down or even radically up. I think that would be disconcerting to traders to traders on Wall Street.

Sort of interesting that the Nasdaq is up a bit. Actually a lot of computers shares, telecom shares didn't take such a severe hit yesterday. Of course, there's going to be to be a tremendous amount of buying of computers and telecom to replace all those destroyed in the World Trade Center. Someone I know said they were buying computers like crazy, making computer salesman very happy the other day. That may be reflected a little bit in some of those shares.

We are seeing market activity that is more subdued. One trader I spoke to said things are getting back to normal, Paula. He was so relieved to be able to watch a baseball game last night. And so we are seeing a sense of normalcy return to the street.

ZAHN: Actually it was a very touching scene last night, of some of the baseball players actually wearing New York City police department caps and fire department caps to honors those that lost their life here.

One of the things you touched on earlier this morning is companies whose businesses are related to the defense industry. Do you expect those to continue to climb?

SERWER: Well, they've climbed so much. Defense stocks were up tremendously yesterday. Raytheon, Northrop, Lockheed, those types of stocks were up. An interesting one also is Sterman Ruger (ph), which is the last publicly gun trading in the United States. That up a buck, to $10.30 yesterday, which is a big move there. I think the defense stocks will continue to be strong.

But there are a lot of areas which will probably also benefit, if you will, from this terrible tragedy, as we rebuild parts of America, as we ramp up security and rebuild the World Trade, Pentagon. There is going to be construction that's going to have to be undertaken, and a whole variety of businesses that will actually be stimulated by this unfortunate event.

(STOCK MARKET UPDATE)

ZAHN: Andy Serwer, it's a good thing you agreed to stand by and live on this chair for the next several days. One last reflection on what investors out there might experience. Obviously, we are having some audio problems.

We should explain that first of all, many, many businesses in the downtown area don't even have electricity yet. So it's quite stunning that we've had the success that we've had, being able to catch up with reporters down there on the New York Stock Exchange.

There's still a aging area on the purple area of the stock exchange, where rescue workers are doing their work, so it's understandable why we are having that problem.

Final thought.

SERWER: Absolutely. Well, just one other, you know, tidbit that or of gets lost in a day like this. The consumer price index came out this morning as expected. That number sort of gets lost in the shuffle though, Paula. It was a number that reflected the economy before this tragedy, And I think a lot of those numbers will be now thrown away. We will have to rewrite a lot of the economic numbers and indicators going forward, to reassess the economy, to rethink where we're headed. And as I said before, a lot of companies are going to be announcing that their earnings are going to be considerably less because of this tragedy, but they were weak before, because of the economy had been weak.

ZAHN: Patty Davis is spending time researching some what of what you talked about this morning, about the plummeting stocks from major airline industries. We going to talk with her in just a moment about some meetings that are going on between the airline industry officials and Transportation Secretary Mineta. But before we go to that, we have just gotten word from the White House the president's remarks will not happen at 11:30 from the Rose Garden, but at 10:20, just about 15 minutes from now. We will go to those remarks live from the Rose Garden at 10:20.

Set your watches now. Right now, let's go back to Patty Davis, who will give us some insights as to the status of any potential bailout plan that the federal government might agree to.

Hi, Patty, good morning.

PATTY DAVIS, CNN CORRESPONDENT: Hi, Paula.

Well, I can tell you that the airline executives are here at the Department of Transportation right now, pleading for help from the administration. Also plan to do so to Congress later today. United, American, Delta, U.S. Airways, Northwest, Delta CEOs all here, meeting with Transportation Secretary Norman Mineta and FAA administrator Jane Garvey.

Now the industry is estimating that it has taken a $5 billion hit just this week alone from the hijackings. Bankruptcy said to be in the near future days, if not weeks or months for some of the carriers. And one said that, indeed, if the Congress does nothing, that the entire industry could be in solvent by Christmas.

(BEGIN VIDEO CLIP)

NORMAN MINETA, TRANSPORTATION SECRETARY: There's no question the industry has been having financial difficulties, even before this heinous terrorist attack last Tuesday. Those events have made the problems more acute. We have, both industry and government, two key responsibilities as we meet here today. First, public safety, and secondly, a financially healthy industry.

(END VIDEO CLIP)

DAVIS: Some airlines have announced job cuts already. Continental, 12,000 furloughs, and U.S Airways yesterday saying 11,000 layoffs expected. Sources telling CNN that Northwest late they're week also to announce job cuts. This industry getting hit very hard. In total, the industry says a hundred thousand jobs could be lost from these hijackings. Passengers just not booking. They are staying away from the airlines, and the shutdown of the system. Also members of Congress, as you said, considering a bailout package, as much as $5 billion in direct cash assistance, $12 billion to $17 billion in other kinds of relief, including loan guarantees.

These executives after they finish their meeting here at the Transportation Department are headed to the White House to meet with economic advisers there, then to Congress to lobby on another bailout package. They are asking for as much as $24 billion from Washington -- Paula.

ZAHN: Patty, I need your help on this one. The president obviously very concerned about the state of the American airline industry, held meetings yesterday. His aides communicated to "The New York Times" this morning that while he ordered them to assemble a -- quote -- comprehensive package, to bail out the country's major airlines, they're not sure he is in fact made a commitment to $20 billion worth of loan guarantees to keep them operating. What have you learned about that.

DAVIS: Well, it's kind of a wait and see. They want to assess, they want to hear from the airline executives, how much do they need? The airline executives are saying that they want that $24 billion. But that has to be hashed out and decided how much can be afforded in the budget to go towards this. How much is Congress willing to agree to? So they want it hear from the airline executives first and have the airline executives make their case before they come up with a real hard number -- Paula.

ZAHN: All right, Patty Davis, thanks so much.

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