Release #05.043
September 27, 2005

ALPA President: Senate Must Pass Pension Reform Legislation Now

WASHINGTON, D.C. --- Capt. Duane E. Woerth, president of the Air Line Pilots Association (ALPA), issued the following statement today after addressing the audience of a National Journal Policy Council forum on the airline pension crisis. Woerth states that the U.S. Senate must act immediately to reform pension funding rules to protect airline employees who have earned their pensions, the Pension Benefit Guaranty Corporation (PBGC), which insures their pensions, and ultimately, taxpayers, who could be forced to assume the PBGC debt if airline pension plans are terminated.

“The U.S. Senate must bring pension reform legislation similar to the legislation proposed by Senator Johnny Isakson (R-GA) and Senator Jay Rockefeller (D-WVA) to the floor for a vote before its October recess. 

“Two years ago, the Air Line Pilots Association predicted, and began working to prevent, the dire circumstances that face the airline industry today and that have contributed to the recent bankruptcy protection filings by Delta and Northwest. For two years, ALPA has worked tirelessly to move legislation through Congress that would have helped prevent this crisis and protect employees’ pensions, the PBGC and ultimately, American taxpayers. 

“Congress must act now to find a permanent solution to the problems facing the airline industry. The fact that at least 60 percent of the airline seats purchased today are flown by bankrupt carriers demonstrates that the need to reform pension funding rules could not be more urgent.

“The Isakson/Rockefeller legislation contains the two-part solution that the people of this nation need. First, it would allow airlines to affordably fund their defined-benefit pension plan liabilities using a longer amortization period. Second, it would permit airlines to use a more realistic interest rate to calculate the amount of money that they must contribute to their plans. Both reform elements are essential.

“Enacting these reforms would be a win for airline workers, who would have a greater likelihood of receiving the benefits they already have earned under their defined benefit pension plans. 

“These reforms would be a win for the PBGC, which would have to cover unfunded liabilities if a plan is terminated. Everyone loses if the PBGC acts to take over these pension plans. Without the proposed legislation, the federal agency could take on as much as $10 billion in additional debt that it doesn’t need to incur.

“Airlines would be clear winners, too, because the legislation would allow them to better manage their cash flow and prepare feasible business plans without being sabotaged by unpredictable deficit reduction contributions. A feasible business plan will, in turn, unlock the door to long-term capital financing of the airlines’ business needs.

“The U.S. Senate must bring pension reform legislation that would permanently address the problems of the airline industry to the floor now. We’re hopeful that Senate action will also spur movement on legislation in the House, so that airline employees, the PBGC, and the airlines will all benefit from this urgently needed reform.”

Woerth also called for enactment of S.685, the “PBGC Pilots Equitable Treatment Act,” which would apply the PBGC’s normal retirement age guarantee limit to pilots at their mandatory retirement age of 60.

ALPA represents 64,000 airline pilots at 41 airlines in the U.S. and Canada. Its website is at www.alpa.org. 

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ALPA CONTACTS: John Mazor, Linda Shotwell, (703) 481-4440, media@alpa.org