Bill's delay leaves Aloha pilots in limbo
The U.S. House is postponing a vote on a pension reform bill that the carrier's pilots are counting on
Aloha Airlines' pilots, counting on federal pension reform to save their retirement plan, suffered a minor setback yesterday when a U.S. House leader said an expected vote this week has been postponed until next year.
The Aloha unit of the Air Line Pilots Association had made the pending federal legislation a linchpin of their tentative agreement with the company after the airline had gone to court seeking to terminate the pilots' pension and collective-bargaining agreement. Aloha's pilots had been heartened after the Senate passed its version of the bill 97-2 last month.
The delay on the House vote means the Aloha pilots' pension plan will be terminated along with the plans of the other Aloha unions that had defined-benefit plans. If the legislation had gone into effect Jan. 1, 2006, or sooner, the pilots' pensions would have been frozen retroactive to Jan. 1, 2005.
Still, under the pilots' tentative agreement with the carrier, the union and the company can petition the Pension Benefit Guaranty Corp. to restore the plan if a new pension law goes into effect before the end of next year. If the petition is accepted, the pension plans of the pilots and other affected unions would be frozen effective Jan. 1, 2005. The PBGC is the federal agency that insures pension plans.
"I'm disappointed but not surprised," said Michael Feeney, a member of ALPA's Aloha negotiating committee and the chairman of Aloha's unsecured creditors' committee. "When we signed the document, we pretty much expected that the law wouldn't pass this year. But there's a lot of lobbying going on for this pension relief. It's great for Aloha to go over there and lobby for it. But the ones who make a difference for it are GM and Delphi because they're from heavily Republican-represented states."
Aloha spokesman Stu Glauberman declined to comment on the delay.
The Senate's version of the bill allows companies 20 years to make pension payments that normally are due in seven years. The additional amortization makes keeping the pension plan more financially feasible to a company such as Aloha.
The postponement of the House bill, which is still in committee, was announced yesterday by Acting Majority Leader Roy Blunt, R-Mo. He said the bill lacks Democratic support, and gave no timetable for a vote.
One of the components of the House bill is that it penalizes companies that terminate plans. The penalty is $1,250 per terminated participant for each of three years.
Feeney said the pilots decided during their negotiations to put their faith with Congress.
"The pilots know that counting on Congress to do anything is risky," Feeney said. "But hoping that Congress takes action to save our pension is less risky than the other option, which could have led to the shutdown of the company."
Even with the House bill temporarily stalled, Aloha's pilots are voting this week on ratifying a tentative agreement that would represent the last major hurdle for Aloha to emerge from bankruptcy by its target date of Dec. 15. The tentative agreement has been unanimously endorsed by Aloha's three-member master executive council. The council typically ratifies contracts itself, but decided to send this one out to the approximately 300 Aloha pilots because of the effect on pensions. The results will be announced Monday.
Feeney said he's concerned about the vote, but has no way to gauge which way it will go.
"There are a lot of very angry pilots," he said. "If they follow their leadership it's going to pass by a wide margin. If they don't follow the leadership, it's going to be close."
Feeney said that even if a version of the pension reform bill makes it to the Oval Office, he's concerned President Bush may not sign it.
"I think it's very clear to Congress that there has to be pension reform," Feeney said. "It's just not an airline problem, because you now have the auto companies and everyone else who wants to dump their pensions. I'm more concerned about President Bush's opposition, because he came out with a strong statement (Monday) and said that companies need to honor their obligations on pensions."