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Mar 6, 2008 7:27 pm US/Central
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Pension Insurer Wants In On Delta-Northwest Talks
MINNEAPOLIS (AP) ―
The Pension Benefit Guaranty Corp. wants to be included in talks between Northwest and Delta airlines because it said a merger could leave the carriers without enough assets to cover their pensions.
The Feb. 28 letter from the federal government's pension insurer was first disclosed Thursday by Finance and Commerce, a Twin Cities financial newspaper.
The PBGC became a major shareholder in Delta Air Lines Inc. after it assumed Delta's pilot pension during the airline's Chapter 11 reorganization. Northwest Airlines Corp. avoided that outcome in its bankruptcy because a change in the law gave Northwest more time to get caught up on its pensions.
PBGC director Charles E. F. Millard wrote to both airlines that his agency needs a role in merger discussions to ensure "that all appropriate considerations with respect to the continued health of the airlines' defined benefit pension plans are addressed."
Together, the letter said, the two pension plans "do not have enough assets to pay all promised benefits: if the plans were to terminate, they would be underfunded by over $7 billion."
Delta spokesman Anthony Black told the newspaper that Delta is proud that it preserved its non-pilot pensions.
"Delta has been very clear that any consideration of potential consolidation must protect the interests of our employees and retirees, including ensuring that their pension plans are maintained," he said.
Northwest spokeswoman Tammy Lee said the carrier "has cooperated fully with the PBGC and will continue to do so. Northwest has met all of its pension funding obligations and will continue to meet it's future obligations. We're confident that if any merger were to occur all our pension plans would continue to be funded as required under the Pension Protection Act of 2006."
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)