The airline industry and its unions are pressing for a special break from federal
pension-funding rules, even as Congress debates reform of the rules, according
to the Washington Post.
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customized information for your industry, location, and job.
Get Your Report Now!Under a measure sponsored by Rep. Dave Camp, R-Mich., underfunded airline pensions
could defer for five years the large cash payments they'd otherwise have to
make now. They could also put off repayment of funding deficits for as long
as 20 years, the Post reports.
The exception is aimed at reviving the pension plan of about 7,000 US Airways
pilots, which was taken over by the federal Pension Benefit Guaranty Corp. this
year, after the airline went into bankruptcy. Once revived, proponents of the
meanure hope, the pension plan would return to the airline, which in turn would
have the effect of restoring the pilots' full pensions.
Those pensions were were limited, in some cases severely, by the PBGC.
Treasury and PBGC officials told the Post that they oppose any legislation,
including the Camp bill, that singles out specific industries for special treatment.
"We're very concerned about it," PBGC executive director Steven A.
Kandarian said in an interview with the newspaper. "If you give companies
two decades to make up the shortfall caused by skipping their required pension
contributions, the risk is that some of those plans will terminate and transfer
their liabilities to the PBGC. The result would be higher premiums on financially
healthy companies with better-funded pension plans. One sure way to discourage
companies from offering pensions is to make them pay for the unfunded promises
of others."
But Duane E. Woerth, president of the Air Line Pilots Association, the union
spearheading the drive for the legislation, countered that his industry suffered
unique damage in the Sept. 11, 2001, terrorist attacks. Yet, he added, it can
be expected to recover, unlike some debt-laden companies that face large pension-funding
problems.
He said that if the airline pension plans could be salvaged that would reduce
further damage to the PBGC, which is facing a record funding shortfall after
the collapse of the U.S. steel industry. "This is the best way to prevent
the worst-case scenario," Woerth said, adding that Congress must deal with
the issue in a "timely manner," or risk widespread financial damage
to many other retirees.
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