Delta CEO urges Senate to pass pensions legislation
Gerald Grinstein, Delta Air Lines’ chief executive officer, urged the Senate to pass S. 861, the “Employee Pension Preservation Act of 2005,” in order to prevent airlines from having to hand over funding of their pension obligations to the Pension Benefit Guaranty Corp. (PBGC).
The proposed legislation was introduced by Sens. Johnny Isakson, R-Ga., and Jay Rockefeller, D-W. Va.
Grinstein was providing testimony to the U.S. Senate Committee on Finance at a special hearing: “Preventing the Next Pension Collapse: Lessons from the United Airlines Case.”
“The pension situation has grown even more urgent since US Airways and United Airlines shed almost $15 billion in pension obligations,” Grinstein said. “These moves place additional competitive pressure on Delta and other airlines facing large, immediate funding contributions at a time when we can least afford them.”
“Without changes to the current rule, airlines will almost certainly be forced into bankruptcy and have to transfer additional pension liabilities to the PBGC,” Grinstein said. “Alternatively, if Congress chooses to move swiftly to pass legislation that provides a manageable, affordable pension funding schedule, airlines will have a far greater chance to stay out of court and continue the business transformation the new marketplace requires.”
Grinstein said that the proposed legislation, S. 861, would allow airlines to extend their required pension payments and make them on a more manageable schedule, using more stable, long-term assumptions. Grinstein explained that any airline that chooses this option would agree to limit its pension liabilities by freezing pension benefits, or by funding pension liabilities in the year that they occur.
“The decisions made now about the pension funding crisis will be far reaching and profound,” Grinstein said. “They will affect the future of airline employees and retirees, the PBGC, the traveling public, and the major network airlines.”