Toad
09-15-2005, 08:12 PM
I'm undecided on this issue. On one hand the airline employees (pilots that I know in particular) have been grossly overpaid for years letting their unions drive up pay and putting their companies in the red. On the other hand, I hate to see an individual loose their pension. The numbers are staggering.
UPDATE 2-Delta, Northwest pensions loom over pension agency
Wed Sep 14, 2005 9:03 PM ET
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(Recasts; adds details, background)
By Susan Cornwell
WASHINGTON, Sept 14 (Reuters) - Bankruptcy filings at Delta Air Lines Inc. (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp. (NWAC.O: Quote, Profile, Research), on Wednesday threaten to hit the already-burdened U.S. pension agency with billions of dollars more in liabilities, an agency spokesman and lawmakers warned.
The Pension Benefit Guaranty Corp. (PBGC) said Delta's pension plans were a staggering $10.6 billion underfunded. The PBGC would have to pick up $8.4 billion if the agency has to take over the plans.
Already facing a $23.3 billion deficit, the PBGC released no Northwest details. The airline said on Wednesday it would be required to contribute $3.3 billion to its defined benefit plans from 2006 through 2008.
PBGC spokesman Randy Clerihue said the agency hoped Delta and Northwest would continue to meet their pension obligations.
"However, if they don't and the pension plans terminate, the deficit of the pension insurance program would grow by several billion dollars," Clerihue said.
Northwest said it hoped to avoid terminating its plans while Delta said there could be no guarantees about the future of its pension plans, even though both carriers said they would continue to pursue legislation that would make their pension plans more affordable.
United Airlines (UALAQ.OB: Quote, Profile, Research) and US Airways (UAIRQ.OB: Quote, Profile, Research) have already used bankruptcy to turn their plans over to the PBGC.
There were immediate calls in Congress for action to help Delta and Northwest keep their pensions.
"We must not sit by and do nothing while thousands of hard-working Americans' retirement security is at risk," said Senate Minority Leader Harry Reid, a Democrat from Nevada.
When the PBGC takes over pensions plans it sets limits on maximum payouts that often penalize higher-paid workers. Continued ...
At Delta, there are 5,000 retired pilots and some could lose more than half their benefits if the court allows transfer of the plans to the PBGC, said an attorney for the pilots.
The U.S. Senate is considering legislation that would give airlines more time to replenish their underfunded pensions.
"It's not too late. I think the bankruptcy filings give much greater clarity, and a greater imperative to Congress now to have an industry-specific solution for the airlines," said Republican Rep. Tom Price of Georgia, where Delta is based.
"I don't believe it is in Congress' or the taxpayers' best interests to have these plans thrown on the PBGC," Price said.
But one analyst who has been tracking pension problems said he thought it was almost inevitable that Northwest and Delta would add to the PBGC's woes, increasing the risk that a taxpayer rescue of the agency will eventually be needed.
"Federal bankruptcy law makes it (pensions) one of the easier obligations to pass on," said Douglas Elliott, who heads the nonpartisan Center on Federal Financial Institutions think-tank. "PBGC's debt hole is going to be a lot bigger."
Reid said that this month the Senate should take up pension reform proposals that have already passed two different committees. The bills attempt to repair pension underfunding across all industries and shore up the PBGC's insurance fund.
The Senate bills include provisions offering airlines up to 14 years to make up pension underfunding. Delta and Northwest had asked for 25 years. (Additional reporting by Jui Chakravorty)
UPDATE 2-Delta, Northwest pensions loom over pension agency
Wed Sep 14, 2005 9:03 PM ET
Printer Friendly | Email Article | Reprints | RSS (Page 1 of 2)
(Recasts; adds details, background)
By Susan Cornwell
WASHINGTON, Sept 14 (Reuters) - Bankruptcy filings at Delta Air Lines Inc. (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp. (NWAC.O: Quote, Profile, Research), on Wednesday threaten to hit the already-burdened U.S. pension agency with billions of dollars more in liabilities, an agency spokesman and lawmakers warned.
The Pension Benefit Guaranty Corp. (PBGC) said Delta's pension plans were a staggering $10.6 billion underfunded. The PBGC would have to pick up $8.4 billion if the agency has to take over the plans.
Already facing a $23.3 billion deficit, the PBGC released no Northwest details. The airline said on Wednesday it would be required to contribute $3.3 billion to its defined benefit plans from 2006 through 2008.
PBGC spokesman Randy Clerihue said the agency hoped Delta and Northwest would continue to meet their pension obligations.
"However, if they don't and the pension plans terminate, the deficit of the pension insurance program would grow by several billion dollars," Clerihue said.
Northwest said it hoped to avoid terminating its plans while Delta said there could be no guarantees about the future of its pension plans, even though both carriers said they would continue to pursue legislation that would make their pension plans more affordable.
United Airlines (UALAQ.OB: Quote, Profile, Research) and US Airways (UAIRQ.OB: Quote, Profile, Research) have already used bankruptcy to turn their plans over to the PBGC.
There were immediate calls in Congress for action to help Delta and Northwest keep their pensions.
"We must not sit by and do nothing while thousands of hard-working Americans' retirement security is at risk," said Senate Minority Leader Harry Reid, a Democrat from Nevada.
When the PBGC takes over pensions plans it sets limits on maximum payouts that often penalize higher-paid workers. Continued ...
At Delta, there are 5,000 retired pilots and some could lose more than half their benefits if the court allows transfer of the plans to the PBGC, said an attorney for the pilots.
The U.S. Senate is considering legislation that would give airlines more time to replenish their underfunded pensions.
"It's not too late. I think the bankruptcy filings give much greater clarity, and a greater imperative to Congress now to have an industry-specific solution for the airlines," said Republican Rep. Tom Price of Georgia, where Delta is based.
"I don't believe it is in Congress' or the taxpayers' best interests to have these plans thrown on the PBGC," Price said.
But one analyst who has been tracking pension problems said he thought it was almost inevitable that Northwest and Delta would add to the PBGC's woes, increasing the risk that a taxpayer rescue of the agency will eventually be needed.
"Federal bankruptcy law makes it (pensions) one of the easier obligations to pass on," said Douglas Elliott, who heads the nonpartisan Center on Federal Financial Institutions think-tank. "PBGC's debt hole is going to be a lot bigger."
Reid said that this month the Senate should take up pension reform proposals that have already passed two different committees. The bills attempt to repair pension underfunding across all industries and shore up the PBGC's insurance fund.
The Senate bills include provisions offering airlines up to 14 years to make up pension underfunding. Delta and Northwest had asked for 25 years. (Additional reporting by Jui Chakravorty)