Airwise News
Monday September 6, 2004
Reuters
ALPA Considers Pension Shift
September 3, 2004
The nation's largest airline pilots' union is considering moving away from the traditional pension system that labor groups have fiercely defended for years, but is now in crisis, the union's president says.
Willingness by the Air Line Pilots Association (ALPA) to weigh other pension options at several airlines represents a new strategy by the most powerful airline union, whose actions on contract matters often influence other labor groups.
It is also a recognition that old-style pensions, which have been a cornerstone of contracts at the biggest airlines for decades and guarantee a set payout, may no longer be feasible for all workers.
ALPA President Duane Woerth said in an interview that the union's leaders are considering a two-part strategy.
The first step would ensure older workers and retirees for all airline unions receive what they have been promised under the endangered defined benefit system. After that, ALPA would consider negotiating pension changes for its other, younger members.
"We don't have to have this crisis," Woerth said of dangerously underfunded pension plans that could be terminated and replaced with less generous ones at bankrupt United Airlines and other struggling carriers if they were to enter bankruptcy. "This nightmare does not have to happen."
At issue are defined pension plans, products from a by-gone era of corporate generosity that rely on hefty company contributions. They are prized by unions for the security they offer, but have been disappearing over the past two decades in favor of self-directed 401(k) programs and other investment options that push more risk onto employees.
The federal agency that insures pensions estimates that defined pension plans at several airlines are underfunded by USD$31 billion. United's outstanding liability alone is USD$8.3 billion.
Pension costs at discount carriers are much lower because they have cheaper pension plans.
CONGRESS WOULD BE ASKED TO HELP
Retirement plans that are terminated by an airline are turned over to the government, which sets annual limits on how much it is prepared to pay.
Pension plan recipients at United would lose nearly USD$2 billion in promised benefits if the airline were to end all four plans covering 120,000 workers and retirees, the Pension Benefit Guaranty Corp. estimates. The federal PBGC insures corporate pensions.
Woerth said maintaining existing benefits for older workers and retirees would require congressional action to change pension funding law to let airlines stretch certain required contributions over several years. This would reduce underfunding and give cash-strapped airlines breathing room.
Congress approved a similar measure in the spring, but the benefit ends next year. Woerth said ALPA would only proceed to the second part of the plan if lawmakers were to act.
Then, ALPA, which represents aviators at all of the oldest brand-name US airlines except American Airlines, would consider negotiating changes to their pension plans.
"At some point it becomes a mixture," Woerth said of pension options that ALPA units at different carriers would have to negotiate. "Some may decide to move completely away (from defined benefits)."
Pilots have the most to lose if pension plans are terminated because they are the highest paid airline workers.
But Woerth's rescue strategy may be too late for employees at United, which is in a desperate struggle to cut costs and find investors. And US Airways, which terminated its pilots' defined benefit plan in 2003 to get out of bankruptcy, is scrambling to avert another Chapter 11 filing.
It is also unclear if Congress would again offer to help the airlines after approving a string of relief measures for the industry over the past three years.
Big passenger airlines represented by ALPA include United, US Airways, Delta Air Lines, Continental Airlines and Northwest Airlines.
Who said Pilots were stupid...oh, that's right... me. But it looks like somebody recognizes the writing on the wall...hence I apologize
But Congress is NOT going to like anybody in aviation pretty soon. Then again...it's their screwed up system in the first place. Hey...I just work here
Monday September 6, 2004
Reuters
ALPA Considers Pension Shift
September 3, 2004
The nation's largest airline pilots' union is considering moving away from the traditional pension system that labor groups have fiercely defended for years, but is now in crisis, the union's president says.
Willingness by the Air Line Pilots Association (ALPA) to weigh other pension options at several airlines represents a new strategy by the most powerful airline union, whose actions on contract matters often influence other labor groups.
It is also a recognition that old-style pensions, which have been a cornerstone of contracts at the biggest airlines for decades and guarantee a set payout, may no longer be feasible for all workers.
ALPA President Duane Woerth said in an interview that the union's leaders are considering a two-part strategy.
The first step would ensure older workers and retirees for all airline unions receive what they have been promised under the endangered defined benefit system. After that, ALPA would consider negotiating pension changes for its other, younger members.
"We don't have to have this crisis," Woerth said of dangerously underfunded pension plans that could be terminated and replaced with less generous ones at bankrupt United Airlines and other struggling carriers if they were to enter bankruptcy. "This nightmare does not have to happen."
At issue are defined pension plans, products from a by-gone era of corporate generosity that rely on hefty company contributions. They are prized by unions for the security they offer, but have been disappearing over the past two decades in favor of self-directed 401(k) programs and other investment options that push more risk onto employees.
The federal agency that insures pensions estimates that defined pension plans at several airlines are underfunded by USD$31 billion. United's outstanding liability alone is USD$8.3 billion.
Pension costs at discount carriers are much lower because they have cheaper pension plans.
CONGRESS WOULD BE ASKED TO HELP
Retirement plans that are terminated by an airline are turned over to the government, which sets annual limits on how much it is prepared to pay.
Pension plan recipients at United would lose nearly USD$2 billion in promised benefits if the airline were to end all four plans covering 120,000 workers and retirees, the Pension Benefit Guaranty Corp. estimates. The federal PBGC insures corporate pensions.
Woerth said maintaining existing benefits for older workers and retirees would require congressional action to change pension funding law to let airlines stretch certain required contributions over several years. This would reduce underfunding and give cash-strapped airlines breathing room.
Congress approved a similar measure in the spring, but the benefit ends next year. Woerth said ALPA would only proceed to the second part of the plan if lawmakers were to act.
Then, ALPA, which represents aviators at all of the oldest brand-name US airlines except American Airlines, would consider negotiating changes to their pension plans.
"At some point it becomes a mixture," Woerth said of pension options that ALPA units at different carriers would have to negotiate. "Some may decide to move completely away (from defined benefits)."
Pilots have the most to lose if pension plans are terminated because they are the highest paid airline workers.
But Woerth's rescue strategy may be too late for employees at United, which is in a desperate struggle to cut costs and find investors. And US Airways, which terminated its pilots' defined benefit plan in 2003 to get out of bankruptcy, is scrambling to avert another Chapter 11 filing.
It is also unclear if Congress would again offer to help the airlines after approving a string of relief measures for the industry over the past three years.
Big passenger airlines represented by ALPA include United, US Airways, Delta Air Lines, Continental Airlines and Northwest Airlines.
Who said Pilots were stupid...oh, that's right... me. But it looks like somebody recognizes the writing on the wall...hence I apologize
But Congress is NOT going to like anybody in aviation pretty soon. Then again...it's their screwed up system in the first place. Hey...I just work here
