Pension relief for airlines in sight
By MARILYN GEEWAX
The Atlanta Journal-Constitution 09/22/05
Washington — The U.S. Senate could pass an airline pension relief bill "within a week or 10 days," Sen. Johnny Isakson (R-Ga.) said Wednesday. The bill is expected to bear on whether Delta Air Lines defaults on its pension plans while in Chapter 11 proceedings.
After several rounds of talks with key lawmakers this week, "things are progressing," he said in an interview.
This summer, two Senate committees approved broad pension legislation that would give major airlines 14 years to pay off their underfunded pension plans, up from roughly four years under current law. The full Senate has not yet taken up the legislation.
Delta and Northwest Airlines, both in Chapter 11 and facing large pension plan shortfalls, want Congress to let them spread out payments over 25 years to conserve cash. Together, they have about $16 billion in shortfalls, or the difference between the money in their funds and their total liabilities.
Isakson, a primary supporter of airline relief, said he still is negotiating to work out a compromise between 14 and 25 years. He said Senate leaders may hold a vote on a standalone airline bill, rather than the overall pension package, to move the matter along more quickly.
Such a bill could be sent to the House for a quick vote, he said.
In bankruptcy court, Delta and Northwest could ask for their judges' approval to default on their plans.
The federal Pension Benefits Guaranty Corp. would take over pension payments to retirees, up to certain limits. United Airlines took such a step this summer.
Members of Congress are concerned the PBGC itself could be overwhelmed by pension defaults, leaving taxpayers to make good on pensions.
Isakson said allowing airlines to stretch out payments makes it less likely they will default and would be "good for the industry and the retirees and the taxpayers."
By MARILYN GEEWAX
The Atlanta Journal-Constitution 09/22/05
Washington — The U.S. Senate could pass an airline pension relief bill "within a week or 10 days," Sen. Johnny Isakson (R-Ga.) said Wednesday. The bill is expected to bear on whether Delta Air Lines defaults on its pension plans while in Chapter 11 proceedings.
After several rounds of talks with key lawmakers this week, "things are progressing," he said in an interview.
This summer, two Senate committees approved broad pension legislation that would give major airlines 14 years to pay off their underfunded pension plans, up from roughly four years under current law. The full Senate has not yet taken up the legislation.
Delta and Northwest Airlines, both in Chapter 11 and facing large pension plan shortfalls, want Congress to let them spread out payments over 25 years to conserve cash. Together, they have about $16 billion in shortfalls, or the difference between the money in their funds and their total liabilities.
Isakson, a primary supporter of airline relief, said he still is negotiating to work out a compromise between 14 and 25 years. He said Senate leaders may hold a vote on a standalone airline bill, rather than the overall pension package, to move the matter along more quickly.
Such a bill could be sent to the House for a quick vote, he said.
In bankruptcy court, Delta and Northwest could ask for their judges' approval to default on their plans.
The federal Pension Benefits Guaranty Corp. would take over pension payments to retirees, up to certain limits. United Airlines took such a step this summer.
Members of Congress are concerned the PBGC itself could be overwhelmed by pension defaults, leaving taxpayers to make good on pensions.
Isakson said allowing airlines to stretch out payments makes it less likely they will default and would be "good for the industry and the retirees and the taxpayers."
