News Releases

Tuesday, July 26, 2005

Isakson Praises Senate Panel for Addressing Airline Pension Funding Crisis
Urges Compromise to Give Airlines Alternatives to Bankruptcy

WASHINGTON - U.S. Senator Johnny Isakson (R-Ga.) praised the Senate Finance Committee for taking steps today to protect airline employee pensions by providing airlines with new options for funding their pension plans and avoiding bankruptcy.

The Senate Finance Committee today unanimously approved broad pension legislation, which includes a provision for airlines that would let them spread their pension plan payments over a more manageable schedule of 14 years plus a seven-year transition period instead of the current four years. Isakson introduced bipartisan legislation in April to address the airline pension crisis and has been working with the Finance Committee for the past three months on how best to protect taxpayers and airline employee pensions.

Several large U.S. airlines currently are struggling to meet required pension payments and are considering eliminating their pension plans altogether or filing for bankruptcy, which would lead to their pension plans being dissolved.

"Airline employees deserve to have their earned pensions protected, and the legislation approved today by the Senate Finance Committee does not go as far as I would like but it is good start," Isakson said. "I will continue working with my colleagues to ensure the interests of the airline employees and the American taxpayers are protected."

In April, Isakson and Senator John D. Rockefeller IV (D-W.Va.) introduced the "Employee Pension Preservation Act of 2005," which would allow airlines to spread their pension plan funding over a more manageable schedule of 25 years - instead of the current four years - and under more stable, long-range terms. Before an airline can use one of the options in the bill, it must have an affirmative vote of its union employees. Isakson's bill is co-sponsored by Senators Conrad Burns (R-Mont.), Norm Coleman (R-Minn.), Byron Dorgan (D-N.D.), Tom Carper (D-Del.) and Kent Conrad (D-N.D.).

The bill also protects taxpayers by limiting the liability of the Pension Benefit Guarantee Corporation, which likely would have to borrow from the U.S. Treasury to meet its obligation to pay airline pensions if one or more carriers declared bankruptcy.

Senate Finance Chairman Charles Grassley (R-Iowa) today reiterated the urgent need to address the pension crisis:  "The PBGC can't sustain many more hits to its bottom line, and the potential for a taxpayer-funded bailout is growing every day we do nothing."

Isakson's bill has the support of airline employees, their collective bargaining organizations and their employers. Rep. Tom Price (R-Ga.) has introduced an identical bill in the House.