Reply #67: Delta and Northwest Airlines threaten BANKRUPTCY to avoid funding pensions [View All]

[UpInArms]

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-06-07T145933Z_01_N07614918_RTRIDST_0_CONGRESS-PENSIONS-UPDATE-1.XML

excerpt:

Top executives at Delta Air Lines (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWAC.O: Quote, Profile, Research) told lawmakers the companies could go bankrupt and terminate their pensions if Congress does not act immediately on legislation that would allow the airline industry to stretch out contributions to severely underfunded retirement plans.

Financed by premiums paid by corporations, the PBGC is facing a $23.3 billion deficit fueled by having to take over the pension plans of troubled companies, most recently airlines.

PBGC recently agreed to guarantee $6.6 billion of pension obligations at bankrupt United Airlines (UALAQ.OB: Quote, Profile, Research), the largest pension default in U.S. history.

PBGC Executive Director Bradley belt told the Senate Finance Committee that United had been able to go for years without making any cash contributions to the plans or paying additional premiums to the agency.

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Gerald Grinstein, Delta's chief executive and Douglas Steenland, president and CEO of Northwest, told the Senate hearing that pensions covering more 150,000 current and former employees and retirees at both companies are unmanageable and could lead to insolvency.

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