Senate passes pension reform

[WorldTraveler]

Capping a multi-year long effort, DL has succeeded at saving its non-pilot employee pensions and changing US law, in a win-win-win solution for its employees, taxpayers, and the company - as I predicted would occur years ago when other carriers were dumping their pensions on the PBGC. Even though the president has said he will sign the legislation, the size of the votes in both the House and Senate make the legislation veto proof, indicating the broad support for pension reform affecting all Americans. While it is regrettable that DL's pilot pension will be terminated, they understood that the lump sum payouts were unsustainable and will be well compensated for the losses they will sustain through the termination.

DL will have a cleaner restructuring with less gov't interference but more importantly this hopefully marks the beginning of a new chapter in corporate restructuring that will no longer see employee pensions terminated while companies continue to operate.

Congratulations to not only DL employees but also those at AA, CO, and NW as well as 140 million other US workers who will all have alot to be thankful for this weekend.

 

[jimntx]

Don't start congratulating us just yet. AMR management is not happy at all about the special terms extended to DL that were NOT extended to AMR and others.

As I understand it, AMR and most other companies get 10 years to play catch up with the pension underfunding. DL gets 14 or 15 years.

 

[WorldTraveler]

I believe it is 17 for DL and NW.

While there are provisions that are contentious, many will argue that CO and AA could hard freeze their pensions and get the better terms. AA and CO do get better provisions than other US companies. CO's pilot pension has been frozen so they are half in the DL/NW camp and half in the AA camp.

Senate leaders had previously said they would consider a technical correction that would address the difference. I don't know what was agreed to before the vote was taken but it was overwhelming. I personally have no problem with all four carriers getting the same treatment as long as the provisions are enough to help DL and NW save their pensions. Two categories of airline pensions is enough - have or have not vs have, have not, and have with punitive terms.

While AA and CO might have something of a disadvantage, your pensions are more secure today than they were yesterday.

 

[Bear96]

Despite WT's insistence to the contrary by saying over and over that DL management won't destroy DL employees' pensions, in fact DL converted their non-pilot pensions from a traditional defined benefit plan (which are the types of plans I understand this legislation would help) to cash-balance plans years ago. So how does this help them?

That is a serious question -- I would like to understand this.

 

[jimntx]

WT, understand I don't begrudge anyone any relief on pension plans that means their employees (and not just their execs) get to collect on their expected pensions. I just know that I read something that AMR execs were not happy about they only got 10, and DL and NW (thanks, btw. I couldn't remember who the other was) get 17.

Bear, good question. I had forgotten that the pensions had converted to cash-balance. It will be interesting to know the answer.

 

[WorldTraveler]

Cash balance pensions are still a defined benefit plan and are covered by this legislation. It is just a different method of calculating the benefit.

AA did put out a press release today praising the new pension reform legislation. While I am sure they would have liked to have been on favorable terms w/ DL and NW, they have nowhere near the amount of leverage that DL and NW had by threatening termination. Sadly, DL and NW’s position in BK gave them more leverage. Again, I have no problem for all of the airlines w/ remaining pensions to get the same rules but I suspect it will be very difficult to go back and fix one small piece of a massive piece of legislation. Obviously, the House and Senate negotiators confronted the same headwind in trying to get equal treatment between AA/CO and NW/DL during the bill creation process.

 

[Ralph_78]

Don't start congratulating us just yet. AMR management is not happy at all about the special terms extended to DL that were NOT extended to AMR and others.

As I understand it, AMR and most other companies get 10 years to play catch up with the pension underfunding. DL gets 14 or 15 years.

Has President Bush said he will sign the bill? I know The Atlanta Journal Constitution said earlier in the year he threatned a veto because he did not want the airlines to have any special favors.

Ralph

 

[WorldTraveler]

the size of both the House and Senate votes makes the legislation veto proof. Bush has said he would sign the bill even though he doesn't like the airline specific relief because he recognizes it is the best effort to reform pension legislation. And pragmatically, everyone recognizes that DL and NW had everyone's backs up against the wall - either they got what they wanted or there would be as much as $10 billion more unfunded pension obligations turned over to the PBGC. Thankfully for everyone, that won't happen.

 

[superG]

WT, understand I don't begrudge anyone any relief on pension plans that means their employees (and not just their execs) get to collect on their expected pensions. I just know that I read something that AMR execs were not happy about they only got 10, and DL and NW (thanks, btw. I couldn't remember who the other was) get 17.

Bear, good question. I had forgotten that the pensions had converted to cash-balance. It will be interesting to know the answer.

DL cud use some 777's....just sign the "merger papers" and you can have the 17yrs too.

 

[FWAAA]

DL cud use some 777's....just sign the "merger papers" and you can have the 17yrs too.

All AA has to do to get 17 years is lobby its bought and paid for Congress in September after the recess. Or get the unions to agree to a hard-freeze (which is as likely as hell freezing over).

Merge with DL? No thanks. DL can marry UA or CO. AA will be happy to hook up with (and have its way with) NW.

 

[superG]

All AA has to do to get 17 years is lobby its bought and paid for Congress in September after the recess. Or get the unions to agree to a hard-freeze (which is as likely as hell freezing over).

Merge with DL? No thanks. DL can marry UA or CO. AA will be happy to hook up with (and have its way with) NW.

Go fer it....and all those airbuses

 

[MCI transplant]

Go fer it....and all those airbuses

<_< ---- That's about as likely as "Save a Connie" here in Kansas City painting their "SuperG" in aa colors!!! It's just not going to happen! aa might buy bits and peaces, if the opportunity arises, but that's about it!