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NWA Pension Relief Likely, Senator Says
By Liz Fedor, Star Tribune
May
12, 2006
A key congressional leader says he's hopeful that Northwest's pension plans will be saved by stretching out contributions.
The chairman of the Senate Finance Committee said Thursday that he's confident Congress will pass a pension bill this year that allows Northwest Airlines to save its pension plans.
Sen. Chuck Grassley, R-Iowa, said he expects an airline provision to be included in a major pension-reform bill now in a conference committee. Northwest management and labor leaders have been pushing a law change that would give Northwest 20 years to make contributions to three pension plans underfunded by $3.7 billion. Under current law, Northwest has just a few years to make the required contributions.
Unless Northwest buys more time to make the payments, its executives have said they will be forced to terminate the pension plans, as United Airlines and US Airways did in bankruptcy.
"The chances of getting [the airline measure] through just the way it is are very good," Grassley told the Star Tribune a day after meeting with Doug Steenland, Northwest CEO, and Mark McClain, chairman of the Northwest pilots union.
Steenland and McClain, in a rare joint lobbying effort, were on Capitol Hill on Wednesday and Thursday to meet with 12 key members of the House and Senate.
They forged their lobbying plans on May 3, when Steenland called McClain shortly after Northwest pilots ratified a long-term concessionary contract.
Grassley said the pilots' approval of a new contract "makes my job a lot easier in working with this [pension] bill." The pilots agreed to freeze their defined-benefit pension plan earlier this year and shift to a 401(k)-style plan for future benefits. This month, they ratified an agreement that extends a 23.9 percent pay cut, and makes other contract changes to save Northwest $358 million a year.
"It shows good faith on the part of employees to share the load of turning the company around," Grassley said.
"Northwest pilots and their families stepped up to the plate and made the hard choices," McClain said in a joint interview with Steenland. "One of the elemental pieces of this agreement was preservation of the retirement plans."
So Steenland and McClain decided to work together toward their common goal of securing the passage of the pension legislation.
Steenland said Northwest is not asking Congress for any appropriation. Instead, he said, "We want to pay and honor our obligations to those plans." But it needs to stretch out its contributions over a longer period of time, he said.
Sen. Norm Coleman, R-Minn., encouraged the Senate Republican caucus to support the pension legislation at a Thursday lunch. "The rash of bankruptcies has caused folks to take a look at this," Coleman said in an interview.
"We are not letting the airline off the hook," he said, emphasizing that Northwest wants to pay what it owes to the pension plans.
The Pension Benefit Guaranty Corp. (PBGC), which is funded through premiums paid by businesses with pension plans, would inherit Northwest's pension plans if they are terminated. The PBGC, which was created by Congress, reported late last year that it has a deficit of $25.7 billion, partly because it took over several failed pension plans from airlines and steel companies.
Because of the weakened financial condition of the PBGC, Coleman stressed, many senators in both parties want to avoid allowing the Northwest pension plans to fail. As more pension plans are shifted to the PBGC, he said, the odds increase that it would seek a taxpayer bailout.
The other key senators McClain and Steenland met with were Max Baucus, D-Mont.; Edward Kennedy, D-Mass.; Trent Lott, R-Miss., and Harry Reid, D-Nev., the minority leader.
On the House side, they met with three members of the pension conference committee -- Reps. Dave Camp, R-Mich.; John Kline, R-Minn., and Bill Thomas, R-Calif. -- and three other members of the Minnesota delegation -- Republican Reps. Mark Kennedy and Jim Ramstad and Democratic Rep. Jim Oberstar.
Grassley said the joint effort "sends a signal we seldom see that labor and management are cooperating."
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