Senate Passes Pension Bill After Leaders Promise Airline Parity

The U.S. Senate late Thursday adopted a House-passed bill that overhauls the nation's private pension laws and includes more time for Northwest and Delta airlines to shore up their pension plans, leaving Continental and American airlines waiting for a "technical corrections" bill in September to provide them equal treatment.

The 93-5 vote only came after leaders assured senators from American and Continental hub states that the corrections measure would be among the first considered when Congress returns to Washington after a month-long recess. The bill now goes to President George W. Bush for his signature.

Lawmakers from states served by Continental and American had groused for much of the week that the pension bill effectively gave bankrupt Northwest and Delta, which have frozen their active defined-benefit pension plans, 17 years to shore up their pension plans while requiring Continental and American, which have not yet frozen their plans, to do it in 10.

The Senate earlier had backed a provision allowing all four airlines 20 years to pay unfunded pension liabilities. Senators last night were discouraged from trying to amend the pension bill on the floor because any amendment would have required differences to be reconciled in a conference committee with the House of Representatives, which already has adjourned for the summer.

Sen. Kay Bailey Hutchison (R-Texas) last night said she cast a vote in favor of the legislation only after receiving guarantees that the disparity perceived by Continental and American is fixed. "We will continue to try to equalize American and Continental with Northwest and Delta," she said. "We have everyone's word that we'll make an effort."

The treatment of the airlines has touched off a new round of public relations jockeying and lobbying. Continental spokesman Dave Messing last week said, "We share the Texas delegation's concern about the competitive aspects of pension reform and appreciate their efforts to prevent the government from picking winners and losers in the airline industry."

Northwest Airlines spokesman Kurt Ebenhoch, however, yesterday said there was no favoritism for his company and Delta in the bill because American and Continental would receive the same pension treatment if they freeze their plans, something the financially healthier airlines have avoided.

Northwest last night applauded the Senate's action. "With employees making the difficult decision and sacrifice to freeze their pension plans, all of us looked to Congress for the additional time required to save our plans," said Andrea Fischer Newman, senior vice president of government affairs. "Tonight, the legislative branch of our government has spoken and protected airline employees' retirement benefits and U.S. taxpayers."