Updated from 12:23 p.m. EST

The White House on Wednesday opposed Republican-led proposals in Congress to bail out the airlines with $3 billion, setting up a potential legislative showdown over a desperate industry.

"The administration does not oppose some assistance for the airlines, but given the economic facts on the ground, we believe that the level of airline assistance recommended by the House and the Senate committees are excessive," White House spokesman Ari Fleischer told reporters.

Airline stocks rallied Wednesday after committees in both the House and Senate had approved airline aid packages worth more than $3 billion apiece on Tuesday.

The Amex Airline index closed up $2.64, or 8.75%, to $32.82 on Wednesday.



, parent of American Airlines, the world's largest carrier, was a notable gainer, up $1.25, or 41.67%, to $4.25.


(CAL) - Get Report

gained 6.63%, while low-cost carrier


(LUV) - Get Report

was up 5.92%. In after-hours trading following the White House comments, AMR was up another 10 cents and Continental rose 15 cents. Southwest rose a penny in the late session. Shares of


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(LUV) - Get Report

were down 8 cents after hours after closing down 11 cents in regular trading.

The rival proposals, at $3 billion-plus each, are nowhere near the potential $9 billion in aid that the Air Transport Association, a trade group representing the industry, requested a month ago. But any help is good for the industry, which has complained that security costs, burdensome taxation and insurance expenses have pushed it to the brink of bankruptcy.

"You cannot call this a bailout," said Rep. Tom DeLay (R., Texas), the House Majority Leader. "I believe the industry needs to work through their market problems on their own."

While the House and Senate aid packages have differences that will need to be worked out in conference committee, both proposals stand in stark contrast to the Bush administration's action to date, which has offered nothing to an industry that lost $18.6 billion over the last two years.

"A considerable gulf remains between Congress and the administration regarding the amount and structure of this assistance," said Norman Mineta, the Secretary of Transportation.

Unlike the White House's $75 billion war spending bill, which included no help for airlines, Congress has made its airline-aid proposals part of a larger emergency spending bill for the war that is slated for quick action. This means that help for airlines could be passed by Congress before the break on April 11. Had airline aid been a separate bill, it could have taken months before the House and Senate debated and passed legislation for the president to sign.

All told, the House's aid package weighs in at $3.2 billion, and it reimburses airlines for some security costs that Congress mandated after the Sept. 11 terrorist attacks, such as fortifying cockpit doors. The House will also reimburse airlines for some of the higher security fees they began charging passengers in February 2002.

The Senate has put $3.5 billion of aid on the table, with reimbursements for security costs, security fees charged passengers and costs related to war-risk insurance. But nearly $2.8 billion of the Senate's package would extend the subsidies given to airlines post-Sept. 11 to offset rising insurance expenses. And an additional $225 million would extend unemployment benefits for 26 weeks to airline employees who have been put out of work.

Not only do both the House and Senate aid packages compensate airlines for security costs, they tie airline executive pay to performance goals. Despite posting steep losses, Delta Air Lines,



and Continental have given their top executives lucrative pay packages in recent weeks, reasoning that their airline's performance topped those of peers.

But in an industry where losses are getting deeper, being the best of the worst isn't saying much, and that's a major reason the House bill includes a provision that would cancel aid to the airlines unless executive pay is frozen. "No airline receiving funding may provide compensation to senior executives that exceeds the base pay and benefits that such executives received in 2002," states the amendment from Rep. Martin Sabo, (D., Minn.).

The Senate has a similar measure to cap base pay at 2002 levels for the top five executives at a company for the next two years, which is slightly weaker than the wording in the House's plan.