Thu, Jun 07, 2007
Provision Snuck Into War Funding Bill
Two US senators have demanded employee pension data from
American Airlines and Continental Airlines, after it was revealed a
last-minute change in pension laws was inserted into a military
funding bill approved two weeks ago.
That change -- snuck into the Iraq War funding legislation
approved by Congress on May 24 -- would reduce cash contributions
American and Continental, along with a handful of smaller carriers,
would have to chip in towards their employee pension funds. Over
time, the provision amounts to a savings of $2 billion -- all for
the airlines.
Senate Finance Committee Chairman Max Baucus (D-MT) and Iowa
Republican Charles Grassley (shown below) demanded the airlines
turn over their pension data.
"These two airlines flew around the Finance Committee to get
this pension provision in the spending bill, but we will review in
the light of day exactly what deal they got," Baucus and Grassley
said in a joint statement, reported by CNN.
American and Continental have asked Congress for interest rate
breaks and other pension changes for almost a year, since Congress
overhauled corporate pension funding rules.
Both carriers said the changes were needed to give them parity
with carriers like Northwest and Delta -- which had the advantage
of renegotiating, or dumping, their pension plans while under
Chapter 11.
On the other hand, American and Continental were able to avoid
bankruptcy while restructuring their operations. They say that puts
them at a competitive disadvantage, as current pension
requirements penalize the carriers for not resorting to filing
for bankruptcy.
Baucus said he would investigate the matter, to see if the
changes snuck into the war funding bill are fair. It's unclear
whether the lawmakers would seek to overturn those changes,
though.
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