US Airways Would Restructure Pensions
- Thread starter A320 Driver
- Start date
C
chipmunn
Guest
Biff:[BR][BR]Seems as if the Post-Gazette wrote their article to soon and Senator's Grassley and Baucus may have changed their tune. By the way, I understand without this legislation the IAM and AFA pension could also be at risk.[BR][BR][A href="http://www.sunspot.net/news/nationworld/bal-te.usair10jan10,0,7572485.story?coll=bal%2Dnews%2DnationAccirding"]http://www.sunspot.net/news/nationworld/bal-te.usair10jan10,0,7572485.story?coll=bal%2Dnews%2Dnation[BR][BR][/A]According to news media reports, without the legislation, Specter said, the airline will not be able to secure the $1 billion loan it needs to emerge from bankruptcy. US Airways is rushing to resolve the issue before a hearing Thursday in U.S. Bankruptcy Court where it will present its reorganization plan. [BR][BR]Biff, if the pensions are not adequately dealt with the airline could liquidate.[BR][BR]Chip[BR][BR]
Dark Wrench
Member
- Aug 30, 2002
- 44
- 0
[blockquote]
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On 1/10/2003 8
18 AM chipmunn wrote:
Biff, by the way, if either the IAM or AFA reject their pensions, some people believe the company could then terminate the IAM and AFA pensions and use the funds planned to restore mechanic and F/A pensions to help fund the pilot shortfall.
Will it occur? I do not know, but it's an option. First, we have to see how today's vote turns out, but as Dave Siegel said in his December 24 letter to all employees, the only way for IAM and AFA members to save their pension is to vote "yes".
Chip
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The threats just never seem to stop....
Voted "NO"
Have a good day!!!!!
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On 1/10/2003 8
18 AM chipmunn wrote: Biff, by the way, if either the IAM or AFA reject their pensions, some people believe the company could then terminate the IAM and AFA pensions and use the funds planned to restore mechanic and F/A pensions to help fund the pilot shortfall.
Will it occur? I do not know, but it's an option. First, we have to see how today's vote turns out, but as Dave Siegel said in his December 24 letter to all employees, the only way for IAM and AFA members to save their pension is to vote "yes".
Chip
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[/blockquote]
The threats just never seem to stop....
Voted "NO"
Have a good day!!!!!
C
chipmunn
Guest
Biff, by the way, if either the IAM or AFA reject their pensions, some people believe the company could then terminate the IAM and AFA pensions and use the funds planned to restore mechanic and F/A pensions to help fund the pilot shortfall.[BR] [BR]Will it occur? I do not know, but it's an option. First, we have to see how today's vote turns out, but as Dave Siegel said in his December 24 letter to all employees, the only way for IAM and AFA members to save their pension is to vote "yes".[BR] [BR]Chip
OP
A320 Driver
Veteran
- Aug 24, 2002
- 3,358
- 2,319
- Thread Starter
- Thread starter
- #20
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[/blockquote]
The threats just never seem to stop....
Voted "NO"
Have a good day!!!!!
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[/blockquote]
Boy, wasn't THAT a suprise?
[/blockquote]
The threats just never seem to stop....
Voted "NO"
Have a good day!!!!!
----------------
[/blockquote]
Boy, wasn't THAT a suprise?
C
chipmunn
Guest
Dark Wrench:[BR][BR]It's not a threat it's reality and that is why your union recommended ratification. However, Cav did many a people a service by reporting the grim reality of the job market for mechanics and other people.[BR][BR]If the TA's are rejected there seem to be two options: Liquidation or a S.1113 hearing, which Bill Freiberger and the TWU attorney indicated could occur. By the way, it was just announced the bankruptcy court ordered pay cuts for the UAL IAM, how do you think Judge Mitchell will rule in US Airways' case, when the judge has not turned down one single US Airways motion?[BR][BR]But, the option is yours. Vote "no" and get hit harder or vote "yes" and move on. No threats, just the reality of today's environment.[BR][BR]Chip
Biff, if the pensions are not adequately dealt with the airline could liquidate.[BR][BR]Chip[BR]-----------------------------------------------------------------------------------------------------[BR] Isn't working at U a great adventure ride, I love it. (sarcasm) [BR] [BR][BR][BR][BR]
[P]I am seeking the path leading away from U's vortex wave of woes, getting closer daily guided by the light of sanity out into the aviation free zone from where I came.[/P][FONT size=2][/FONT][BR]
[P]I am seeking the path leading away from U's vortex wave of woes, getting closer daily guided by the light of sanity out into the aviation free zone from where I came.[/P][FONT size=2][/FONT][BR]
gilbertguy
Senior
- Aug 29, 2002
- 368
- 0
[blockquote]
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On 1/10/2003 7:54:08 AM Biffeman wrote:
[A href="http://www.post-gazette.com/businessnews/20030110airp2.asp"]http://www.post-gazette.com/businessnews/20030110airp2.asp[/A]
Looks like this is not how they are gonna solve it. Say bye bye to your pension
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Pilots to lose 75% of their pension benefits...how about 100% like customer service?!!
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On 1/10/2003 7:54:08 AM Biffeman wrote:
[A href="http://www.post-gazette.com/businessnews/20030110airp2.asp"]http://www.post-gazette.com/businessnews/20030110airp2.asp[/A]
Looks like this is not how they are gonna solve it. Say bye bye to your pension
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Pilots to lose 75% of their pension benefits...how about 100% like customer service?!!
C
chipmunn
Guest
Transcript of Senate debate on US Airways pension restoration funding - January 9
Mr. SANTORUM. Mr. President, I rise today to talk about an issue that is of acute importance to my State, the State of Pennsylvania, and, I argue, to the traveling public throughout the east coast, in particular. That is the situation of US Airways and the problem that US Airways is encountering in reorganizing the company and trying to get the government loan provided here by legislation enacted after September 11. The Air Transportation Stabilization Board has set forth criteria that US Airways must meet in order to secure that loan and continue to operate. They are under a relatively tight timeframe and have to go to court next Thursday, I believe, to get the reorganization plan approved.
There are several issues out there, but the most important and major issue is the issue of the pension plan that US Airways has and the expense associated with that, and in particular, the pilots' plan. US Airways has been working now for a better part of a year to work with the union and within its management to find cost savings, money dictated by the Air Transportation Stabilization Board, and they have done an excellent job. I will say that the US Airways unions have done an outstanding job in working with management to try to get the company to be an efficient and lower cost airline to survive in these very difficult times in the airline industry.
One of the most important aspects of the reorganization, as I mentioned before, was the rather significant pension liability and, in particular, because of the higher salaries of pilots, the pilot pension program. US Airways has been negotiating with the pilots now for quite some time, and within the last month or so came up with an agreement to restructure the plan--in fact, to terminate the plan and then restart the plan--with a different benefit structure and having the cost of those benefits amortized over a 30-year period.
They went to the Pension Benefit Guaranty Corporation, the government agency that oversees the pension plans and guarantees those plans, and asked for an approval to terminate and restart the plan with a 30-year amortization. The Pension Benefit Guaranty Corporation informed the company and union they believed they had no legal authority. Any time you get two lawyers in a room you have five opinions; but in this case, some lawyers on both sides suggested there was, and some suggesting there was not, legal authority to terminate and restart.
I will say, for the purpose of the taxpayers, had the Pension Benefit Guaranty Corporation decided to accept the US Airways pilots' union plan, there would have been no liability to the PBGC, and no cost associated with it. The airline would have terminated the plan but maintained all the liability and simply amortized that cost over a 30-year period. The Pension Benefit Guaranty Corporation proposed in the alternative that they terminate the plan; PBGC take over the responsibility for that plan; and US Airways move forward without a pilot pension plan.
Such a plan, which I think you could make the argument, would be to the financial benefit of US Airways and the management because they would be released of this rather significant, roughly $3 billion, obligation of paying pilot pensions. But, US Airways management, working together with their unions in a great spirit of cooperation, did not want to have their pilot pensions reduced in the area of 75 percent. That would be the result of a takeover by the PBGC. So they have pled with the PBGC to approve their plan which would result in, again, a drastic reduction in the benefits of the pilots, but not as draconian as the PBGC change.
Having said all that, they have been back and forth and back and forth and we are now at a point where there does not seem to be any hope for an agreement. We have been working together, myself and Senator Specter from Pennsylvania. I ask unanimous consent that the distinguished Senator from North Carolina, Senator Dole, be added as a cosponsor to S. 119--the bill I will call up in a minute.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SANTORUM. We have been working together, the Senators from North Carolina, Florida, New York, Pennsylvania, Massachusetts, and Virginia--Senator Warner is a sponsor of this resolution--to see what we can do to be helpful in this process. The problem is, candidly, that this plan has to be filed by next Thursday, a week from today. So the PBGC says they do not have the legal authority to approve the US Airways plan.
So the only way to get around that problem is for Congress to act to amend the law, pension law, and allow for this agreement that US Airways and the pilots union have agreed to, to be a valid change in plan under the pension laws of this country.
So, I, in just a few minutes, am going to ask unanimous consent that we bring up this legislation and that we debate it on the floor of the Senate and pass this legislation today. I understand this is an extraordinary thing to ask. I know the Chairman of the Finance Committee is here, as well as the former Chairman of the Finance Committee and now ranking member. They have been working diligently trying to deal with this very complex issue. I understand there are a lot of companies who are in similar circumstances as US Airways. But this is a dire situation.
This is the largest carrier on the east coast. This is probably the airline, I would argue, most affected by September 11. It was not one of the airlines targeted by the terrorists on September 11 but, as everybody knows, it is the dominant carrier in the cities that were affected by the terrorist incidents. So, in particular, Reagan National Airport, which was closed for a long period of time, is the most profitable hub of US Airways. So it was dramatically impacted by Government action of shutting down airports, not just by the reduction in the air trafficking that was going on in the country, and the traveling, but by Government action actually shutting down the facility.
So I think we have a special obligation as a result of that to help this particular airline because it was, again, arguably, most affected by what happened.
I understand that this is, as we term it here in the Senate, a rifleshot. And rifleshots are not looked upon kindly by the Finance Committee and by this institution. But I would certainly make the argument that, if a rifleshot were ever warranted, this is a rifleshot that certainly deserves to hit the target.
So, Mr. President, I ask unanimous consent that the Finance Committee be discharged from further consideration of S.119; that the Senate then proceed to its immediate consideration; that the bill be read three times, passed, and the motion to reconsider be laid upon the table, with no intervening action or debate.
Several Senators addressed the Chair.
Mr. SPECTER. Mr. President, I ask my colleague to withhold the request until I have had a chance to make a brief statement.
Mr. SANTORUM. I withhold my request until the Senator from Pennsylvania speaks.
The PRESIDING OFFICER. The request is withheld.
Mr. SPECTER. Mr. President, I sought recognition to join my distinguished colleague, Senator Santorum, in the presentation of this matter which is of great importance, not only to Pennsylvania, but great importance to the country.
The US Airways system is the sixth-largest carrier in the United States. It provides service on a national and international basis. As a result of the problems of September 11, US Airways has had considerable financial problems and has moved forward to get a loan guarantee from the Federal Government, $1 billion, and to accomplish that there have been major concessions made by labor and major concessions made by suppliers to enable the airline to chart a course for the future on which they can succeed.
The Pension Benefit Guaranty Corporation has interpreted the law to say that they are not in a position to accept the termination of a plan and the reinstatement unless there is a legislative change. If the bill, which Senator Santorum, Senator Dole and I are proposing, is not enacted, airline pilots will have a drastic reduction in their pension benefits, and the taxpayers will have all of the obligations thrust upon the Pension Benefit Guaranty Corporation so that the taxpayers will be hurt and the pilots will be hurt and, ultimately, consumers of airline travel will be hurt. The legislation which we have proposed would authorize the PBGC to have a discontinuance of the plan and then to have a reinstatement of the plan. I think it is preeminently sensible.
I am not unaware of the prerogatives of the Finance Committee and their guardianship of the law generally, and I do not subscribe to rifleshot, buckshot--any shot. This is a proposal that makes sense. If other companies come in and can make a similar presentation, that makes sense, too.
So it is my hope that we will be able to consider this bill on the merits. We are not too busy to take a little time of the Senate having a discussion of the bill. It cannot be considered without a unanimous consent agreement. But, if the unanimous consent agreement were entered into, we could have debate.
If the Senator from Iowa and the Senator from Montana disagree with the substance of the bill, I can understand that. We can debate it, it can be considered, and we can vote on it. But this is one of those situations where I think a little extra consideration is in line.
If the unanimous consent request is granted, then we can have debate on the merits, and I will go into these issues in some greater detail for the edification of my colleagues whom I hope will have a chance to vote on this matter.
I thank my colleague from Pennsylvania for yielding and for withholding the unanimous consent request.
I have sought recognition today to join my colleague Senator Santorum in introducing legislation that would benefit American taxpayers by saving them hundreds of millions of dollars in potential Federal pension liabilities as well as protecting pension benefits of US Airways pilots. Senator Santorum and I believe this legislation is a win-win proposition that benefits all parties involved, and it is good policy that the American consumer will benefit from as well.
Sound transportation infrastructure is the backbone of a healthy and vibrant economy. The airline industry continues to struggle in the wake of the events of September 11. Though passengers are returning, the industry is still operating at well below historic levels, and this is obviously affecting the industry's profitability.
US Airways, the Nation's sixth-largest air carrier, has been particularly hard hit, filing for chapter 11 bankruptcy protection on August 11, 2002, and laying off over 13,000 employees since. One unique challenge faced by this airline is the fact that it has historically had a large and lucrative operation at Washington's Ronald Reagan National Airport, and so long as operations from this airport were constrained due to post-September 11 security considerations, US Airways was losing a significant portion of its revenues.
US Airways is now in the final stage of obtaining approval for a $1 billion loan guarantee from the Air Transportation Stabilization Board, ATSB. I have been assured that this loan guarantee will enable US Airways to emerge successfully from chapter 11 bankruptcy proceedings and again vie successfully for passengers in the international market.
But before this can happen, US Airways needs to restructure its pension obligations, which are backed by the Federal Pension Benefit Guaranty Corporation, PBGC, and, ultimately, the American taxpayer. US Airways's pension liabilities increased significantly in recent months due to poor market performance and a 41-year low in interest rates. Funding obligations for the pilots' pension plan is estimated to be $575 million for 2004 and $333 million for 2005. Given its current cash position, US Airways cannot make these payments, and, additionally, the airline has indications from the ATSB that the ATSB will not approve its loan considering these large obligations.
But US Airways is proposing a simple and cost-saving solution that would essentially terminate and then restore its pilots' pension plan, a change that would allow the airline to amortize the plan's unfunded accrued liability and unfunded current liability in level payments over a 30-year period. Simply put, payments that would have been made over a 5-year period would be spread out over 30 years, a schedule that would allow US Airways to fully meet its pension obligations. This means that the PBGC would not have to step in to cover liabilities US Airways would not otherwise be able to meet, and the pilots are agreeable to this proposal. This also means that US Airways would then likely have its loan guarantee approved and thus be able to emerge from bankruptcy protection.
The only problem is that the PBGC has determined that it does not have the legal authority to approve such a plan. Inaction would leave US Airways with no option but to terminate its pilots' pension plan and regrettably transfer liability to the PBGC.
To avoid this unnecessary situation, we are proposing a legislative clarification that would specify that the PBGC has the legal authority to terminate and then restore US Airways's pilots' pension plan, thereby protecting the pilots' pensions while potentially saving the American taxpayer hundreds of millions of dollars annually. I want to emphasize that this is a simple statutory clarification, a clean bill that provides no additional benefits to US Airways and is of no cost to the Federal Government. In fact, successful and timely passage of this bill may very well save the U.S. Treasury billions of dollars over a period of many years.
US Airways will present its reorganization plan before U.S. Bankruptcy Court on January 16, 2003, prior to which it must resolve this pensions issue. Accordingly, time is of the essence, and this legislative fix must be signed into law prior to January 16, 2003, for it to have any positive effect. It is thus with this sense of urgency that Senator Santorum and I ask for the bill's immediate consideration.
I ask unanimous consent a list of facts in support of this legislation be printed in the RECORD.
Facts in Support of Legislation
PROBLEM/BACKGROUND
US Airways is in the final stage of obtaining approval of (1) a $1 billion loan guarantee from the Air Transportation Stabilization Board (``ATSB''), (2) a $240 million equity investment from the Retirement System of Alabama, and (3) a plan of reorganization pursuant to which US Airways would emerge from Chapter 11 bankruptcy proceedings.
On 12/20/02, US Airways filed a Plan of Reorganization and Disclosure Statement with the bankruptcy court. A hearing is scheduled for 01/16/03 on the adequacy of the Disclosure Statement, and if approved, the Plan will be circulated with voting materials to impaired creditors. It is expected that a hearing on confirmation of the plan of reorganization will take place in March 2003.
This progress is a direct result of unprecedented contract modifications agreed to both during the summer and in the last few weeks by the Air Line Pilots Association, International (``ALPA''). These modifications will produce an average savings of $633 million annually.
One of the remaining issues to be resolved is the restructuring of US Airways's pension obligation, which has increased significantly because of the poor market performance and 41-year low interest rates. US Airways sponsors defined benefit plans for its pilots, flight attendants, mechanics and other employees and other employees.
US Airways is facing estimated pension contributions of $1 billion in 2004 and $800 million in 2005 for its defined benefit plans. The pilot plan pension funding obligation alone is estimated to be $575 million for 2004 and $333 million for 2005. The Company can not make these payments, given its cash position. Additionally, it has indications from the ATSB and the ATSB will not approve its loan with these large pension obligations. The ATSB is requiring that US Airways develop a viable business plan for the 7-year ATSB loan period.
The traditional funding waiver permitted under the Internal Revenue Code and the Employee Retirement Income Security Act is not sufficient relief because a waiver applies only one year at a time and the waived contribution is amortized over only a 5-year period. A traditional waiver would actually result in increased pension contributions, particularly in years 2005, 2006 and 2007, which the Company cannot afford.
As of 01/01/02, the funded status (on a current liability and market value of assets basis) of the US Airways pilot defined benefit plan was 73.7 percent. Due to the proper market performance and low interest rates, it is estimated that the funded status of the plan will drop significantly as of 01/01/03 (based on information as of 10/31/02) to 50.1 percent.
US Airways and ALPA reached agreement on substantial changes to the pilots' plan that eliminate and reduce benefits accruing on and after 01/01/03. However, US Airways must resolve the pension funding obligations for benefits that accrued prior to 01/01/03 in order to get final approval for the loan guarantee and emerge from bankruptcy.
There is tremendous urgency to resolving US Airways's pension funding liabilities, which can be achieved in a manner that: Insures the success of US Airways' reorganization; protects the pension benefits of US Airways' employees and retirees, who would lose hundreds of millions of dollars in pension benefits that are not guaranteed by the Pension Benefit Guaranty Corporation (``PBGC'') in the event of plan termination, and retirees, who would hundreds of millions; protect the solvency of dollars in pension benefits that are not guaranteed by the PBGC) in the event of plan termination; and protects the PBGC by providing substantial funding for a continuing plan in place of a plan termination which leaves PBGC with billions of dollars in liabilities that will not be recovered in the bankruptcy.
US Airways' bankruptcy filings emphasized the need to resolve this crisis immediately by legislation, and made clear the likely alternative was plan termination.
SOLUTION
US Airways and ALPA have requested a special funding rule for liabilities that have accrued under the US Airways pilot defined benefit plan as of 12/31/02. Under the proposed bill introduced today, the US Airways pilot defined benefit plan will be treated as if terminated and restored as of 01/01/03, with a restoration payment schedule that amortizes the plan's unfunded liability and unfunded current liability in level payments of a 30-year period.
With enactment of the proposed bill, US Airways would continue to maintain and fund the pension plans for its pilots. US Airways would successfully restructure. US Airways would meet all funding obligations to the pilots' plan by making substantial level pension contributions of approximately $150 million on average per year under the proposed payment schedule. Additionally, with enactment of the proposed bill, the PBGC would avoid the liability and responsibility resulting from the termination of an underfunded pension plan.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. If my colleague would withhold his request, I would like to speak on this issue.
I appreciate the efforts of the two Senators from Pennsylvania to help these underfunded airline pension plans, particularly as it relates to a company that is very important to the economy of their State. We are also in a situation where, as far as I know, the House Ways and Means Committee has not acted on this issue and, consequently, even if the Senate were to pass it the measure would be subject to a blue slip, meaning, under the Constitution, a revenue measure needs to start in the House of Representatives. So if we took action, what would that do? It could not become law.
The legislation the Senator has introduced would create, as a matter of substance, perverse disincentives for all plans that paid premiums to the Pension Benefit Guaranty Corporation. The bill would permit a single airline to avoid the pension funding rules in the Internal Revenue Code, while every responsible plan sponsor funds its own plans. We will need to deal with this particular problem when we deal with the rest of the funding rules and the pension interest rate problem because that is a very real problem and several times we have tried to address it, just not successfully through the whole process. So we get to a point that one set of rules for one company harms the nation's pension laws applicable to the remaining plans.
I respectfully suggest that something this important would surely ought to be referred to the Finance Committee and that we should deal with it under the regular rules of the committee, but particularly we need a solution that would be nation-wide, not dealing with just one company. So I express opposition to this effort.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I renew my unanimous consent request that I stated previously.
The PRESIDING OFFICER. Is there objection?
Mr. BAUCUS. Mr. President, reserving the right to object and I will object, I deeply appreciate the concerns of both Senators from Pennsylvania, the senior Senator and junior Senator, who spoke eloquently about the problems facing those particular airlines, and I understand that. I think every Member of this body does. The fact of the matter is, there are other airlines, too, facing very difficult financial problems these days. It is unfortunate but that is the fact.
I must say, too, as has the chairman of the Finance Committee, I have not seen that proposal. All I know is what I hear on the floor now. I think it would be inappropriate for the Senate to unanimously pass a change in the pension laws which have not been reviewed by other Senators, certainly not by Members of the Finance Committee.
My good friend, Senator Grassley, soon to be chairman of the Finance Committee, makes a very good point. Even if it were passed here, we would have to wait until some other measure passed in the body so it could be amended and have it considered. There are a lot of reasons--although I certainly appreciate the argument by the Senators--this is not the appropriate time nor the appropriate way to take up this measure.
I ask my good colleagues to work with the committee and to work with Senator Grassley and myself over the next several days or next week--and also with other airlines because other airlines, frankly, are hurt by their request. I was contacted a couple hours ago by airlines that said: Wait a minute. It may be good for them, but it is not good for us.
We have to make sure that all airlines are treated fairly.
I very much look forward to working with my good friends from Pennsylvania, and all Senators. But I just think because of propriety and doing it the right way to make sure this is the right solution that we should not take it up at this time. There may be amendments and modifications to the provision being requested that could be quite helpful to meet some of the objections some others might have. This is the first time we have heard of it. I haven't seen the language. It did not come before our committee.
I must respectfully object to the request.
The PRESIDING OFFICER. Objection is heard.
The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I thank my colleagues from Iowa and Montana for their responses. I appreciate their considerations.
It would be my hope, as I said earlier, that they would recognize the exigencies of this situation and permit us to proceed. But in light of their statements that they intend to object, which I understand will follow, I inquire of my colleague from Montana, who is now chairman, and of my colleague from Iowa, who hopefully by this time tomorrow will have the resolution passed to shift the chairmanship, whether there might be an early hearing set in the Finance Committee.
I am in line to be chairman of the appropriations subcommittee having jurisdiction over the Department of Labor. And Senator Harkin and I have agreed to have a hearing on this next week. But the authorizing committee has the paramount responsibility. There is a U.S. Bankruptcy Court hearing on this matter on Wednesday. I do not think we have a problem about the solvency of US Airways being involved as I thought there might have been several weeks ago. But I think the court might be willing to defer action which touches upon these issues if there was knowledge that there was going to be expedited treatment.
So my question to the chairman and ranking member of the Finance Committee is whether it might be possible to schedule a hearing yet this month which could then be used with the court to defer action with the possibility or prospects of some action by the Senate on this issue, that is, US Airways, or the issue generally.
Mr. BAUCUS. Mr. President, I might say to my good friends that I think that is a good idea. The Senator has my assurance--and I know the assurance of my colleague from Iowa--that we will look into the matter tomorrow, say, and determine if a hearing makes sense. It could well be a very good idea. Maybe it can be resolved in some other way without a hearing.
But I would like to look at the issue and expeditiously, see if there is a way to resolve this matter. It could well be that we could have a hearing this week or sometime this month. It could be a very good idea. We could well do that.
But I could really answer that question a little more after I look at the issue more and know what is involved.
Mr. SPECTER. Mr. President, if I might direct a question through the Chair to the Senator from Montana, he says he may well be able to have a hearing this month. It depends upon his analysis of the legislation or the complexity of it. Would it be a fair statement that the representation could be made to the court that there will be an effort made, if possible, to have a hearing in finance this month?
Mr. BAUCUS. That is a very fair representation.
Mr. SPECTER. I think that would be a yes.
Mr. BAUCUS. That is a yes.
Mr. SPECTER. Might I ask my colleague from Iowa, who will soon waive the gavel, if he concurs in what the Senator from Montana said?
Mr. GRASSLEY. I might modify it just a little bit, but understand that I am making this statement not having had a chance to think deeply on it. But it would be in relationship to the extent to which there should be a hearing just on this one company as opposed to a hearing on the pension problem generally and in the larger context because I did voice in my statement to the Senate that it seems to me that we do have to look into this area, and we have to look at it as a pension problem in a much broader context than just one company. Obviously, in that context, I have absolutely no opposition to looking at the problem of one company. But I also think it ought to be looked into only in the context of the others because of the extent to which it might lead to other companies making the same request.
Mr. SPECTER. Mr. President, if I may direct a question through the Chair to the Senator from Iowa, the substance of what I understand he said is that if it is possible to have a hearing this month, considering whether it be on a single company or the complexity of taking up a broader issue, that consideration would be given to having a hearing this month if it can be done in a practical sense.
Mr. GRASSLEY. In the context of what I stated, the answer to that is, I would agree.
Mr. SPECTER. Mr. President, I take that also to be a yes. I thank my colleague from Iowa.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I am disappointed that we were not able to get unanimous consent. I certainly understand the position of my colleagues from Montana and Iowa. But I just want to reemphasize that the reason we sought to submit this extraordinary act is because of the timing of the judicial submission a week from now. A revenue bill is being generated in the House. As an old House Ways and Means Committee member, I was very jealous of that prerogative and wanted to make sure that we enforced it with regularity if the Senate got out of constitutional control. I thought it could act on these things unilaterally. But, again, I think there is a certain support on the Ways and Means Committee for dealing with this issue. The request of the Senator from Pennsylvania, hopefully, will not only be one communicated to the Finance Committee but also would be communicated to the Ways and Means Committee in the House to seriously look into this.
I know many of my colleagues from Pennsylvania and other Congressmen from other states are going to be adversely affected--potentially affected--by what happens next Thursday. I hope a request will be made to the Chairman of the House Ways and Means Committee to take a very significant look at this. I hope they will be moved to act in a way that would be beneficial to this situation, and again other situations around the country of pensions failing.
But the point I want to reiterate is if this legislation were passed there would be no cost to the Federal Government by picking up the pensions of the pilots and others in the union of US Airways. Without this legislation, the cost to the Pension Benefit Guaranty Corporation, and, therefore, to the taxpayers of the United States would be about $3 billion. So this is a measure that will save $3 billion over a set number of years. That is not pocket change, even in Washington, DC.
I think there has been an attempt to try to address this issue in a way that does not--as the Senator from Iowa said--create an incentive for companies not to fund their legal obligation. I don't think this narrow provision is an incentive for any other corporation to not do what is required of them under the pension laws. But what we have is an extraordinary case where union and management come together to dramatically reduce the benefits of the pilots. And I underscore the words ``dramatically reduce'' the benefits to the pilots. The pilots signed off on it. They have signed off on this as a way for the company to continue to operate. It will save the taxpayers money, and it will save these airlines and all of the employers--as well as the traveling public in the Northeast and throughout the eastern part of the United States.
I think this is a narrow exception. I think this is a special circumstance. Whether we can effectually change something that would allow the kind of flexibility under very stringent rules--I would agree with the Senator from Iowa. It allows the flexibility of the Pension Benefit Guaranty Corporation to look at the unique circumstances of these petitions of companies and unions.
I just remind everyone, this is not the management going in unilaterally saying: We are going to cut benefits and restructure the program. This is the union and the management saying: This is what we want to do. This is a very rare circumstance, indeed. So I do think we have unique circumstances.
Again, I understand the precedent that this sets, but I am hopeful we can work out a change in the law that will give the PBGC the flexibility to look at these unique circumstances, and unique circumstances in the future with respect to other companies, to come up with a solution that is best for the taxpayer as well as best for the companies and unions involved in these very difficult times.
Mr. President, with that, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. CHAMBLISS). The clerk will call the
roll.
The legislative clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HATCH. Mr. President, I ask unanimous consent I can proceed as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SANTORUM. Mr. President, I rise today to talk about an issue that is of acute importance to my State, the State of Pennsylvania, and, I argue, to the traveling public throughout the east coast, in particular. That is the situation of US Airways and the problem that US Airways is encountering in reorganizing the company and trying to get the government loan provided here by legislation enacted after September 11. The Air Transportation Stabilization Board has set forth criteria that US Airways must meet in order to secure that loan and continue to operate. They are under a relatively tight timeframe and have to go to court next Thursday, I believe, to get the reorganization plan approved.
There are several issues out there, but the most important and major issue is the issue of the pension plan that US Airways has and the expense associated with that, and in particular, the pilots' plan. US Airways has been working now for a better part of a year to work with the union and within its management to find cost savings, money dictated by the Air Transportation Stabilization Board, and they have done an excellent job. I will say that the US Airways unions have done an outstanding job in working with management to try to get the company to be an efficient and lower cost airline to survive in these very difficult times in the airline industry.
One of the most important aspects of the reorganization, as I mentioned before, was the rather significant pension liability and, in particular, because of the higher salaries of pilots, the pilot pension program. US Airways has been negotiating with the pilots now for quite some time, and within the last month or so came up with an agreement to restructure the plan--in fact, to terminate the plan and then restart the plan--with a different benefit structure and having the cost of those benefits amortized over a 30-year period.
They went to the Pension Benefit Guaranty Corporation, the government agency that oversees the pension plans and guarantees those plans, and asked for an approval to terminate and restart the plan with a 30-year amortization. The Pension Benefit Guaranty Corporation informed the company and union they believed they had no legal authority. Any time you get two lawyers in a room you have five opinions; but in this case, some lawyers on both sides suggested there was, and some suggesting there was not, legal authority to terminate and restart.
I will say, for the purpose of the taxpayers, had the Pension Benefit Guaranty Corporation decided to accept the US Airways pilots' union plan, there would have been no liability to the PBGC, and no cost associated with it. The airline would have terminated the plan but maintained all the liability and simply amortized that cost over a 30-year period. The Pension Benefit Guaranty Corporation proposed in the alternative that they terminate the plan; PBGC take over the responsibility for that plan; and US Airways move forward without a pilot pension plan.
Such a plan, which I think you could make the argument, would be to the financial benefit of US Airways and the management because they would be released of this rather significant, roughly $3 billion, obligation of paying pilot pensions. But, US Airways management, working together with their unions in a great spirit of cooperation, did not want to have their pilot pensions reduced in the area of 75 percent. That would be the result of a takeover by the PBGC. So they have pled with the PBGC to approve their plan which would result in, again, a drastic reduction in the benefits of the pilots, but not as draconian as the PBGC change.
Having said all that, they have been back and forth and back and forth and we are now at a point where there does not seem to be any hope for an agreement. We have been working together, myself and Senator Specter from Pennsylvania. I ask unanimous consent that the distinguished Senator from North Carolina, Senator Dole, be added as a cosponsor to S. 119--the bill I will call up in a minute.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SANTORUM. We have been working together, the Senators from North Carolina, Florida, New York, Pennsylvania, Massachusetts, and Virginia--Senator Warner is a sponsor of this resolution--to see what we can do to be helpful in this process. The problem is, candidly, that this plan has to be filed by next Thursday, a week from today. So the PBGC says they do not have the legal authority to approve the US Airways plan.
So the only way to get around that problem is for Congress to act to amend the law, pension law, and allow for this agreement that US Airways and the pilots union have agreed to, to be a valid change in plan under the pension laws of this country.
So, I, in just a few minutes, am going to ask unanimous consent that we bring up this legislation and that we debate it on the floor of the Senate and pass this legislation today. I understand this is an extraordinary thing to ask. I know the Chairman of the Finance Committee is here, as well as the former Chairman of the Finance Committee and now ranking member. They have been working diligently trying to deal with this very complex issue. I understand there are a lot of companies who are in similar circumstances as US Airways. But this is a dire situation.
This is the largest carrier on the east coast. This is probably the airline, I would argue, most affected by September 11. It was not one of the airlines targeted by the terrorists on September 11 but, as everybody knows, it is the dominant carrier in the cities that were affected by the terrorist incidents. So, in particular, Reagan National Airport, which was closed for a long period of time, is the most profitable hub of US Airways. So it was dramatically impacted by Government action of shutting down airports, not just by the reduction in the air trafficking that was going on in the country, and the traveling, but by Government action actually shutting down the facility.
So I think we have a special obligation as a result of that to help this particular airline because it was, again, arguably, most affected by what happened.
I understand that this is, as we term it here in the Senate, a rifleshot. And rifleshots are not looked upon kindly by the Finance Committee and by this institution. But I would certainly make the argument that, if a rifleshot were ever warranted, this is a rifleshot that certainly deserves to hit the target.
So, Mr. President, I ask unanimous consent that the Finance Committee be discharged from further consideration of S.119; that the Senate then proceed to its immediate consideration; that the bill be read three times, passed, and the motion to reconsider be laid upon the table, with no intervening action or debate.
Several Senators addressed the Chair.
Mr. SPECTER. Mr. President, I ask my colleague to withhold the request until I have had a chance to make a brief statement.
Mr. SANTORUM. I withhold my request until the Senator from Pennsylvania speaks.
The PRESIDING OFFICER. The request is withheld.
Mr. SPECTER. Mr. President, I sought recognition to join my distinguished colleague, Senator Santorum, in the presentation of this matter which is of great importance, not only to Pennsylvania, but great importance to the country.
The US Airways system is the sixth-largest carrier in the United States. It provides service on a national and international basis. As a result of the problems of September 11, US Airways has had considerable financial problems and has moved forward to get a loan guarantee from the Federal Government, $1 billion, and to accomplish that there have been major concessions made by labor and major concessions made by suppliers to enable the airline to chart a course for the future on which they can succeed.
The Pension Benefit Guaranty Corporation has interpreted the law to say that they are not in a position to accept the termination of a plan and the reinstatement unless there is a legislative change. If the bill, which Senator Santorum, Senator Dole and I are proposing, is not enacted, airline pilots will have a drastic reduction in their pension benefits, and the taxpayers will have all of the obligations thrust upon the Pension Benefit Guaranty Corporation so that the taxpayers will be hurt and the pilots will be hurt and, ultimately, consumers of airline travel will be hurt. The legislation which we have proposed would authorize the PBGC to have a discontinuance of the plan and then to have a reinstatement of the plan. I think it is preeminently sensible.
I am not unaware of the prerogatives of the Finance Committee and their guardianship of the law generally, and I do not subscribe to rifleshot, buckshot--any shot. This is a proposal that makes sense. If other companies come in and can make a similar presentation, that makes sense, too.
So it is my hope that we will be able to consider this bill on the merits. We are not too busy to take a little time of the Senate having a discussion of the bill. It cannot be considered without a unanimous consent agreement. But, if the unanimous consent agreement were entered into, we could have debate.
If the Senator from Iowa and the Senator from Montana disagree with the substance of the bill, I can understand that. We can debate it, it can be considered, and we can vote on it. But this is one of those situations where I think a little extra consideration is in line.
If the unanimous consent request is granted, then we can have debate on the merits, and I will go into these issues in some greater detail for the edification of my colleagues whom I hope will have a chance to vote on this matter.
I thank my colleague from Pennsylvania for yielding and for withholding the unanimous consent request.
I have sought recognition today to join my colleague Senator Santorum in introducing legislation that would benefit American taxpayers by saving them hundreds of millions of dollars in potential Federal pension liabilities as well as protecting pension benefits of US Airways pilots. Senator Santorum and I believe this legislation is a win-win proposition that benefits all parties involved, and it is good policy that the American consumer will benefit from as well.
Sound transportation infrastructure is the backbone of a healthy and vibrant economy. The airline industry continues to struggle in the wake of the events of September 11. Though passengers are returning, the industry is still operating at well below historic levels, and this is obviously affecting the industry's profitability.
US Airways, the Nation's sixth-largest air carrier, has been particularly hard hit, filing for chapter 11 bankruptcy protection on August 11, 2002, and laying off over 13,000 employees since. One unique challenge faced by this airline is the fact that it has historically had a large and lucrative operation at Washington's Ronald Reagan National Airport, and so long as operations from this airport were constrained due to post-September 11 security considerations, US Airways was losing a significant portion of its revenues.
US Airways is now in the final stage of obtaining approval for a $1 billion loan guarantee from the Air Transportation Stabilization Board, ATSB. I have been assured that this loan guarantee will enable US Airways to emerge successfully from chapter 11 bankruptcy proceedings and again vie successfully for passengers in the international market.
But before this can happen, US Airways needs to restructure its pension obligations, which are backed by the Federal Pension Benefit Guaranty Corporation, PBGC, and, ultimately, the American taxpayer. US Airways's pension liabilities increased significantly in recent months due to poor market performance and a 41-year low in interest rates. Funding obligations for the pilots' pension plan is estimated to be $575 million for 2004 and $333 million for 2005. Given its current cash position, US Airways cannot make these payments, and, additionally, the airline has indications from the ATSB that the ATSB will not approve its loan considering these large obligations.
But US Airways is proposing a simple and cost-saving solution that would essentially terminate and then restore its pilots' pension plan, a change that would allow the airline to amortize the plan's unfunded accrued liability and unfunded current liability in level payments over a 30-year period. Simply put, payments that would have been made over a 5-year period would be spread out over 30 years, a schedule that would allow US Airways to fully meet its pension obligations. This means that the PBGC would not have to step in to cover liabilities US Airways would not otherwise be able to meet, and the pilots are agreeable to this proposal. This also means that US Airways would then likely have its loan guarantee approved and thus be able to emerge from bankruptcy protection.
The only problem is that the PBGC has determined that it does not have the legal authority to approve such a plan. Inaction would leave US Airways with no option but to terminate its pilots' pension plan and regrettably transfer liability to the PBGC.
To avoid this unnecessary situation, we are proposing a legislative clarification that would specify that the PBGC has the legal authority to terminate and then restore US Airways's pilots' pension plan, thereby protecting the pilots' pensions while potentially saving the American taxpayer hundreds of millions of dollars annually. I want to emphasize that this is a simple statutory clarification, a clean bill that provides no additional benefits to US Airways and is of no cost to the Federal Government. In fact, successful and timely passage of this bill may very well save the U.S. Treasury billions of dollars over a period of many years.
US Airways will present its reorganization plan before U.S. Bankruptcy Court on January 16, 2003, prior to which it must resolve this pensions issue. Accordingly, time is of the essence, and this legislative fix must be signed into law prior to January 16, 2003, for it to have any positive effect. It is thus with this sense of urgency that Senator Santorum and I ask for the bill's immediate consideration.
I ask unanimous consent a list of facts in support of this legislation be printed in the RECORD.
Facts in Support of Legislation
PROBLEM/BACKGROUND
US Airways is in the final stage of obtaining approval of (1) a $1 billion loan guarantee from the Air Transportation Stabilization Board (``ATSB''), (2) a $240 million equity investment from the Retirement System of Alabama, and (3) a plan of reorganization pursuant to which US Airways would emerge from Chapter 11 bankruptcy proceedings.
On 12/20/02, US Airways filed a Plan of Reorganization and Disclosure Statement with the bankruptcy court. A hearing is scheduled for 01/16/03 on the adequacy of the Disclosure Statement, and if approved, the Plan will be circulated with voting materials to impaired creditors. It is expected that a hearing on confirmation of the plan of reorganization will take place in March 2003.
This progress is a direct result of unprecedented contract modifications agreed to both during the summer and in the last few weeks by the Air Line Pilots Association, International (``ALPA''). These modifications will produce an average savings of $633 million annually.
One of the remaining issues to be resolved is the restructuring of US Airways's pension obligation, which has increased significantly because of the poor market performance and 41-year low interest rates. US Airways sponsors defined benefit plans for its pilots, flight attendants, mechanics and other employees and other employees.
US Airways is facing estimated pension contributions of $1 billion in 2004 and $800 million in 2005 for its defined benefit plans. The pilot plan pension funding obligation alone is estimated to be $575 million for 2004 and $333 million for 2005. The Company can not make these payments, given its cash position. Additionally, it has indications from the ATSB and the ATSB will not approve its loan with these large pension obligations. The ATSB is requiring that US Airways develop a viable business plan for the 7-year ATSB loan period.
The traditional funding waiver permitted under the Internal Revenue Code and the Employee Retirement Income Security Act is not sufficient relief because a waiver applies only one year at a time and the waived contribution is amortized over only a 5-year period. A traditional waiver would actually result in increased pension contributions, particularly in years 2005, 2006 and 2007, which the Company cannot afford.
As of 01/01/02, the funded status (on a current liability and market value of assets basis) of the US Airways pilot defined benefit plan was 73.7 percent. Due to the proper market performance and low interest rates, it is estimated that the funded status of the plan will drop significantly as of 01/01/03 (based on information as of 10/31/02) to 50.1 percent.
US Airways and ALPA reached agreement on substantial changes to the pilots' plan that eliminate and reduce benefits accruing on and after 01/01/03. However, US Airways must resolve the pension funding obligations for benefits that accrued prior to 01/01/03 in order to get final approval for the loan guarantee and emerge from bankruptcy.
There is tremendous urgency to resolving US Airways's pension funding liabilities, which can be achieved in a manner that: Insures the success of US Airways' reorganization; protects the pension benefits of US Airways' employees and retirees, who would lose hundreds of millions of dollars in pension benefits that are not guaranteed by the Pension Benefit Guaranty Corporation (``PBGC'') in the event of plan termination, and retirees, who would hundreds of millions; protect the solvency of dollars in pension benefits that are not guaranteed by the PBGC) in the event of plan termination; and protects the PBGC by providing substantial funding for a continuing plan in place of a plan termination which leaves PBGC with billions of dollars in liabilities that will not be recovered in the bankruptcy.
US Airways' bankruptcy filings emphasized the need to resolve this crisis immediately by legislation, and made clear the likely alternative was plan termination.
SOLUTION
US Airways and ALPA have requested a special funding rule for liabilities that have accrued under the US Airways pilot defined benefit plan as of 12/31/02. Under the proposed bill introduced today, the US Airways pilot defined benefit plan will be treated as if terminated and restored as of 01/01/03, with a restoration payment schedule that amortizes the plan's unfunded liability and unfunded current liability in level payments of a 30-year period.
With enactment of the proposed bill, US Airways would continue to maintain and fund the pension plans for its pilots. US Airways would successfully restructure. US Airways would meet all funding obligations to the pilots' plan by making substantial level pension contributions of approximately $150 million on average per year under the proposed payment schedule. Additionally, with enactment of the proposed bill, the PBGC would avoid the liability and responsibility resulting from the termination of an underfunded pension plan.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. If my colleague would withhold his request, I would like to speak on this issue.
I appreciate the efforts of the two Senators from Pennsylvania to help these underfunded airline pension plans, particularly as it relates to a company that is very important to the economy of their State. We are also in a situation where, as far as I know, the House Ways and Means Committee has not acted on this issue and, consequently, even if the Senate were to pass it the measure would be subject to a blue slip, meaning, under the Constitution, a revenue measure needs to start in the House of Representatives. So if we took action, what would that do? It could not become law.
The legislation the Senator has introduced would create, as a matter of substance, perverse disincentives for all plans that paid premiums to the Pension Benefit Guaranty Corporation. The bill would permit a single airline to avoid the pension funding rules in the Internal Revenue Code, while every responsible plan sponsor funds its own plans. We will need to deal with this particular problem when we deal with the rest of the funding rules and the pension interest rate problem because that is a very real problem and several times we have tried to address it, just not successfully through the whole process. So we get to a point that one set of rules for one company harms the nation's pension laws applicable to the remaining plans.
I respectfully suggest that something this important would surely ought to be referred to the Finance Committee and that we should deal with it under the regular rules of the committee, but particularly we need a solution that would be nation-wide, not dealing with just one company. So I express opposition to this effort.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I renew my unanimous consent request that I stated previously.
The PRESIDING OFFICER. Is there objection?
Mr. BAUCUS. Mr. President, reserving the right to object and I will object, I deeply appreciate the concerns of both Senators from Pennsylvania, the senior Senator and junior Senator, who spoke eloquently about the problems facing those particular airlines, and I understand that. I think every Member of this body does. The fact of the matter is, there are other airlines, too, facing very difficult financial problems these days. It is unfortunate but that is the fact.
I must say, too, as has the chairman of the Finance Committee, I have not seen that proposal. All I know is what I hear on the floor now. I think it would be inappropriate for the Senate to unanimously pass a change in the pension laws which have not been reviewed by other Senators, certainly not by Members of the Finance Committee.
My good friend, Senator Grassley, soon to be chairman of the Finance Committee, makes a very good point. Even if it were passed here, we would have to wait until some other measure passed in the body so it could be amended and have it considered. There are a lot of reasons--although I certainly appreciate the argument by the Senators--this is not the appropriate time nor the appropriate way to take up this measure.
I ask my good colleagues to work with the committee and to work with Senator Grassley and myself over the next several days or next week--and also with other airlines because other airlines, frankly, are hurt by their request. I was contacted a couple hours ago by airlines that said: Wait a minute. It may be good for them, but it is not good for us.
We have to make sure that all airlines are treated fairly.
I very much look forward to working with my good friends from Pennsylvania, and all Senators. But I just think because of propriety and doing it the right way to make sure this is the right solution that we should not take it up at this time. There may be amendments and modifications to the provision being requested that could be quite helpful to meet some of the objections some others might have. This is the first time we have heard of it. I haven't seen the language. It did not come before our committee.
I must respectfully object to the request.
The PRESIDING OFFICER. Objection is heard.
The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I thank my colleagues from Iowa and Montana for their responses. I appreciate their considerations.
It would be my hope, as I said earlier, that they would recognize the exigencies of this situation and permit us to proceed. But in light of their statements that they intend to object, which I understand will follow, I inquire of my colleague from Montana, who is now chairman, and of my colleague from Iowa, who hopefully by this time tomorrow will have the resolution passed to shift the chairmanship, whether there might be an early hearing set in the Finance Committee.
I am in line to be chairman of the appropriations subcommittee having jurisdiction over the Department of Labor. And Senator Harkin and I have agreed to have a hearing on this next week. But the authorizing committee has the paramount responsibility. There is a U.S. Bankruptcy Court hearing on this matter on Wednesday. I do not think we have a problem about the solvency of US Airways being involved as I thought there might have been several weeks ago. But I think the court might be willing to defer action which touches upon these issues if there was knowledge that there was going to be expedited treatment.
So my question to the chairman and ranking member of the Finance Committee is whether it might be possible to schedule a hearing yet this month which could then be used with the court to defer action with the possibility or prospects of some action by the Senate on this issue, that is, US Airways, or the issue generally.
Mr. BAUCUS. Mr. President, I might say to my good friends that I think that is a good idea. The Senator has my assurance--and I know the assurance of my colleague from Iowa--that we will look into the matter tomorrow, say, and determine if a hearing makes sense. It could well be a very good idea. Maybe it can be resolved in some other way without a hearing.
But I would like to look at the issue and expeditiously, see if there is a way to resolve this matter. It could well be that we could have a hearing this week or sometime this month. It could be a very good idea. We could well do that.
But I could really answer that question a little more after I look at the issue more and know what is involved.
Mr. SPECTER. Mr. President, if I might direct a question through the Chair to the Senator from Montana, he says he may well be able to have a hearing this month. It depends upon his analysis of the legislation or the complexity of it. Would it be a fair statement that the representation could be made to the court that there will be an effort made, if possible, to have a hearing in finance this month?
Mr. BAUCUS. That is a very fair representation.
Mr. SPECTER. I think that would be a yes.
Mr. BAUCUS. That is a yes.
Mr. SPECTER. Might I ask my colleague from Iowa, who will soon waive the gavel, if he concurs in what the Senator from Montana said?
Mr. GRASSLEY. I might modify it just a little bit, but understand that I am making this statement not having had a chance to think deeply on it. But it would be in relationship to the extent to which there should be a hearing just on this one company as opposed to a hearing on the pension problem generally and in the larger context because I did voice in my statement to the Senate that it seems to me that we do have to look into this area, and we have to look at it as a pension problem in a much broader context than just one company. Obviously, in that context, I have absolutely no opposition to looking at the problem of one company. But I also think it ought to be looked into only in the context of the others because of the extent to which it might lead to other companies making the same request.
Mr. SPECTER. Mr. President, if I may direct a question through the Chair to the Senator from Iowa, the substance of what I understand he said is that if it is possible to have a hearing this month, considering whether it be on a single company or the complexity of taking up a broader issue, that consideration would be given to having a hearing this month if it can be done in a practical sense.
Mr. GRASSLEY. In the context of what I stated, the answer to that is, I would agree.
Mr. SPECTER. Mr. President, I take that also to be a yes. I thank my colleague from Iowa.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I am disappointed that we were not able to get unanimous consent. I certainly understand the position of my colleagues from Montana and Iowa. But I just want to reemphasize that the reason we sought to submit this extraordinary act is because of the timing of the judicial submission a week from now. A revenue bill is being generated in the House. As an old House Ways and Means Committee member, I was very jealous of that prerogative and wanted to make sure that we enforced it with regularity if the Senate got out of constitutional control. I thought it could act on these things unilaterally. But, again, I think there is a certain support on the Ways and Means Committee for dealing with this issue. The request of the Senator from Pennsylvania, hopefully, will not only be one communicated to the Finance Committee but also would be communicated to the Ways and Means Committee in the House to seriously look into this.
I know many of my colleagues from Pennsylvania and other Congressmen from other states are going to be adversely affected--potentially affected--by what happens next Thursday. I hope a request will be made to the Chairman of the House Ways and Means Committee to take a very significant look at this. I hope they will be moved to act in a way that would be beneficial to this situation, and again other situations around the country of pensions failing.
But the point I want to reiterate is if this legislation were passed there would be no cost to the Federal Government by picking up the pensions of the pilots and others in the union of US Airways. Without this legislation, the cost to the Pension Benefit Guaranty Corporation, and, therefore, to the taxpayers of the United States would be about $3 billion. So this is a measure that will save $3 billion over a set number of years. That is not pocket change, even in Washington, DC.
I think there has been an attempt to try to address this issue in a way that does not--as the Senator from Iowa said--create an incentive for companies not to fund their legal obligation. I don't think this narrow provision is an incentive for any other corporation to not do what is required of them under the pension laws. But what we have is an extraordinary case where union and management come together to dramatically reduce the benefits of the pilots. And I underscore the words ``dramatically reduce'' the benefits to the pilots. The pilots signed off on it. They have signed off on this as a way for the company to continue to operate. It will save the taxpayers money, and it will save these airlines and all of the employers--as well as the traveling public in the Northeast and throughout the eastern part of the United States.
I think this is a narrow exception. I think this is a special circumstance. Whether we can effectually change something that would allow the kind of flexibility under very stringent rules--I would agree with the Senator from Iowa. It allows the flexibility of the Pension Benefit Guaranty Corporation to look at the unique circumstances of these petitions of companies and unions.
I just remind everyone, this is not the management going in unilaterally saying: We are going to cut benefits and restructure the program. This is the union and the management saying: This is what we want to do. This is a very rare circumstance, indeed. So I do think we have unique circumstances.
Again, I understand the precedent that this sets, but I am hopeful we can work out a change in the law that will give the PBGC the flexibility to look at these unique circumstances, and unique circumstances in the future with respect to other companies, to come up with a solution that is best for the taxpayer as well as best for the companies and unions involved in these very difficult times.
Mr. President, with that, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. CHAMBLISS). The clerk will call the
roll.
The legislative clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HATCH. Mr. President, I ask unanimous consent I can proceed as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
I just finished reading today's article in the Pittsburgh Post Gazette about "Usairways Pension Rescue Blocked". We will not know the results of todays vote as of yet but the company sounds as though they are preparing for round 3 of givebacks! When is it going to be enough?
W:EXCH:INVOL
Advanced
- Aug 20, 2002
- 171
- 0
I can't wait to see what the mantra will be for round 3 cuts this spring (if that long from now).
INVOL
INVOL
OldGuyinPA
Veteran
- Aug 20, 2002
- 700
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It won't be long now. Don't even try it Dave...just 5 votes. It won't work anymore. Nor will we.....
C
chipmunn
Guest
MEC CODE-A-PHONE UPDATE - January 10, 2003
This is Roy Freundlich with a US Airways MEC update for Friday, January 10, with three new items:
Item 1. ALPA is continuing to pursue a legislative solution to US Airways pension plan funding issue by securing through legislation restoration funding approval from the PBGC.
On Tuesday, January 14, Pennsylvania Senator Arlen Specter will be holding a meeting at the Pittsburgh International Airport to receive ALPA's input on a legislative solution. The meeting is scheduled to be conducted in two parts.
From 9:00 a.m. to 9:30 a.m. Senator Specter, along with several local congressmen and state representatives, will be meeting with MEC officers, members and committee members to discuss the pension plan issue.
From 9:45 a.m. to 10:15 a.m. Senator Specter will address US Airways pilots and the media on level three of the landside terminal.
To help support this legislative effort, your MEC representatives are requesting all available pilots to attend the 9:45 a.m. public meeting in uniform to demonstrate pilot support for a legislative solution to the pension funding issue.
You can contact the Airport Authority receptionist at 412-472-3500 for additional location information.
Later, at 3:00P.M., in room SD-124 Dirksen Senate Office Building , in Washington D.C., Senator Specter will be holding a senate hearing this issue with the Subcommittee on Labor, Health and Human Services, and Related Agencies, of the Senate Committee on Appropriations.
MEC Chairman Bill Pollock and ALPA President Duane Woerth will be testifying at this hearing. All US Airways pilots are encouraged to attend to again show support for a legislative solution.
This is Roy Freundlich with a US Airways MEC update for Friday, January 10, with three new items:
Item 1. ALPA is continuing to pursue a legislative solution to US Airways pension plan funding issue by securing through legislation restoration funding approval from the PBGC.
On Tuesday, January 14, Pennsylvania Senator Arlen Specter will be holding a meeting at the Pittsburgh International Airport to receive ALPA's input on a legislative solution. The meeting is scheduled to be conducted in two parts.
From 9:00 a.m. to 9:30 a.m. Senator Specter, along with several local congressmen and state representatives, will be meeting with MEC officers, members and committee members to discuss the pension plan issue.
From 9:45 a.m. to 10:15 a.m. Senator Specter will address US Airways pilots and the media on level three of the landside terminal.
To help support this legislative effort, your MEC representatives are requesting all available pilots to attend the 9:45 a.m. public meeting in uniform to demonstrate pilot support for a legislative solution to the pension funding issue.
You can contact the Airport Authority receptionist at 412-472-3500 for additional location information.
Later, at 3:00P.M., in room SD-124 Dirksen Senate Office Building , in Washington D.C., Senator Specter will be holding a senate hearing this issue with the Subcommittee on Labor, Health and Human Services, and Related Agencies, of the Senate Committee on Appropriations.
MEC Chairman Bill Pollock and ALPA President Duane Woerth will be testifying at this hearing. All US Airways pilots are encouraged to attend to again show support for a legislative solution.
