FOR IMMEDIATE RELEASE
Wednesday, April 20, 2005

Isakson Introduces Legislation to Protect Airline Employee Pensions, Taxpayers
Bipartisan Bill Would Give Airlines Alternatives to Bankruptcy  

WASHINGTON –U.S. Senator Johnny Isakson (R-GA) today introduced legislation to help protect airline employee pensions by providing airlines with new options for funding their pension plans that would help them avoid bankruptcy.

Isakson’s bill – the “Employee Pension Preservation Act of 2005,” which is co-sponsored by Senator John D. Rockefeller IV (D-WV) – also would help protect American taxpayers by limiting the liability of the federal agency responsible for funding pensions when companies terminate their pension plans.

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.

“This legislation protects the interests of the airline employees and the American taxpayers, and it will allow us to avoid a catastrophe like the savings and loan debacle of the 1980s,” Isakson said. “I want to make sure airline employees collect the benefits they have worked so hard to earn, and I also want to make sure the airlines have the ability to meet their obligations to their workers.”

The “Employee Pension Preservation Act of 2005” 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.

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.

The bill has the support of airline employees, their collective bargaining organizations and their employers.

Duane Woerth, president of the Air Line Pilots Association: "Senator Isakson's bill comes not a minute too soon, and ALPA applauds his support for pilots and other airline workers. Airlines and their employees are facing a growing crisis regarding their defined benefit pension plans. If airlines do not receive the benefit of the reforms contained in the Isakson bill, more of them may be forced to seek Chapter 11 bankruptcy protection, putting additional airline employee jobs and their pension plans at risk."

Among the key provisions of Isakson’s bill:

• Gives airlines the option of spreading the funding of their pension plans over 25 years instead of four.
• Requires airlines to agree to limit their pension liability by partially or totally freezing current benefits. Employees would be eligible for the benefits they’ve earned up to the date of the freeze but no additional benefits would accrue unless the airline pays for them immediately.  
• Requires that the airline get an affirmative vote from any union representing its employees before choosing one of the options in the bill.
• Caps the per-employee liability of the Pension Benefit Guarantee Corporation at current levels. This would help reduce the likelihood that the PBGC would have to borrow from the Treasury to meet its obligations to airline employees.

Please click here for a copy of the bill and click here for a fact sheet on the bill. For further information, please click here.

###