Senate Airline Aid Bill May Also Seek Executive Pay Cap

April 1, 2003 ( - Even while US Senate leaders are working on a $2.8-billion airline aid package, they may also tack on executive pay limits for the nation's air carriers.

>According to an Atlanta Journal Constitution news report, a comparable House version would provide $2.5 billion in a proposal expected to get quick approval from the House Transportation Committee. Senate Republicans reportedly want to also cap airline executive pay at 2002 base pay levels. Airlines that do not abide by the limits would have to pay a higher share of the cost of government-subsidized war-risk insurance.

>The top five executives at Delta each got more in salary and cash bonus than the CEO of Northwest.   Delta CEO Leo Mullin received $2.2 million in salary and bonus, followed by President Fred Reid at $1.9 million. Both have taken 10% salary cuts this year (See  Delta Trimming Executive Pay  ). “Frankly, it does make it difficult to sell to my colleagues another funding package for legitimate costs airlines are having to incur when you have large bonuses and salary increases,” said Senator Saxby Chambliss (R-Georgia.), according to the newspaper “particularly when 8,000 Delta employees have been laid off over the last several months.”

>Delta spent more than $42 million on the bonuses and pension trusts in 2002, a year in which it incurred losses of $1.3 billion, shed thousands of jobs and led industry calls for federal relief from the costs of heightened security measures. Continental and Northwest airlines also paid CEO bonuses in 2001, though smaller than those at Delta.

>Efforts for a second wave of financial assistance to the nation’s airlines have been fueled by the war’s impact on travel. In recent days, the discussion has been colored by disclosures of the large bonuses given to executives at the Atlanta-based Delta, which also is setting aside money to fully protect top executives’ pension benefits in the event of a bankruptcy, according to the Journal Constitution. Delta maintains the bonuses and pension prepayments to company leaders are necessary to keep its management group together during hard times.

>The Senate version is expected to be attached to President Bush’s nearly $75 billion supplemental budget request to pay for the war with Iraq. The House airline aid proposal is a separate bill.

>Financial assistance being considered for the airlines is not in the form of cash grants, as in late 2001 when airlines received $5 billion in cash. Rather, current proposals would extend war-risk insurance, suspend security fees that were added to airline tickets and reimburse airlines for stronger cockpit doors.