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"Bill would benefit 2 airlines"
- From: "Stephen Irwin" <stepheni@xxxxxxxxxxxxxxxxxxxxxx>
- Date: Fri, 25 May 2007 13:25:11 -0500
Friday, May 25, 2007
Bill would benefit 2 airlines
By TREBOR BANSTETTER
The Fort Worth (TX) Star-Telegram
American Airlines could save millions of dollars in pension costs under a
provision in an Iraq war spending bill that Congress passed late Thursday.
The $120 billion spending bill includes a provision giving a break to Fort
Worth-based American as well as Continental Airlines, based in Houston. The
measure would allow the two airlines to use a more generous interest rate
when calculating the overall obligation of their pension plans, which would
reduce the amount they must pay into the plans to meet funding requirements.
The bill gives American and Continental the same break that rivals Northwest
Airlines and Delta Air Lines got last year under a wide-ranging pension
The 2006 measure gave Northwest and Delta better terms because those
airlines had frozen their pension plans. But American and Continental
complained that the measure penalized airlines that had kept their plans
"We are pleased that as it decides to address pension issues in this bill,
Congress is choosing to include more equitable pension rules for airlines
that have maintained their defined-benefit pension plans," Mary Frances
Fagan, an American spokeswoman, said in a statement.
American's pensions are valued at about $8.6 billion, and the plans are
underfunded by about $1.6 billion.
Last year, American pumped about $323 million into its retirement plans, and
it expects to put in $364 million this year. Airline officials declined to
comment Thursday on how much they may save under the revisions, but the
amount is likely to be considerable.
"Passage of this provision will be of enormous benefit to the thousands of
citizens who are depending on this nest egg when they retire," Sen. John
Cornyn, R-Texas, said in a statement.
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