The pension reform legislation is bogged down in a conference committee, the magazine reported, but Northwest, which is threatening to terminate the retirement security of more than 70,000 employees, wants the Senate to give airlines 20 years to fund these plans themselves. A similar House pension bill, which passed, does not contain a large enough funding relief provision.
The Ohiorepresentative, according to MarketWatch, said he “want[ed] this bill over with,” referring to the slow pace of negotiations between the House and the Senate to settle differences between the two versions of the bill. The main problem, the Web site reported, is that the bills differ over pension-funding rules for “at risk” companies.
According to MarketWatch, both versions of the bill require companies to pay bigger premiums to the Pension Benefit Guaranty Corporation (PBGC), the agency that serves as the nation’s private sector pension insurer.
According to the International Herald Tribune, Northwest reported a net loss of $295 million in April.
If Northwest’s request for more time isn’t granted, the PBGC, which has racked up an almost $23 billion deficit of its own handling other airline and steel industry bankruptcies, will have to bail the airline out of its financial woes, according to Business Insurance magazine.
The PBGC, which estimates that Northwest’s three pension plans have $5.8 billion in assets and $11.5 billion in liabilities, would have to endure one of its biggest losses as a result of taking on the bankrupt airline. The PBGC estimated that it would be responsible for covering $2.8 billion of Northwest’s $5.7 billion funding deficit.
Northwest announced in early April that it would pay more than $8 million in interest and expenses on $371 million of its 2003 pension debt to the PBGC, according to a bankruptcy court filing (See Northwest Makes Deal to Pay on Pensions ).
In early May, Northwest was in danger of collapsing under its $3 billion shortfall, but the bill was still being reconciled between the Senate and the House, (See Pension Bill Likely to Save Northwest Pension Plans ).