Congress will likely pass a pension bill this year allowing Northwest Airlines to save its pension plans, according to the chairman of the Senate Finance Committee.
Sen. Chuck Grassley, R-Iowa, said he expects an airline provision to be included in a major pension-reform bill now in a conference committee.
"The chances of getting (the airline measure) through just the way it is are very good," Grassley told the Minneapolis Star Tribune on Thursday, a day after meeting with Northwest chief executive Doug Steenland and Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association.
The company and labor leaders have been pushing a law change that would give Northwest 20 years to make contributions to three pension plans underfunded by $3.7 billion. Under current law, Northwest has just a few years to make the required contributions.
Unless Northwest buys more time to make the payments, its executives have said they will be forced to terminate the pension plans, as United Airlines and US Airways did in bankruptcy.
Steenland and McClain, in a rare joint lobbying effort, met with 12 key members of the House and Senate earlier this week. They forged their lobbying plans on May 3, when Steenland called McClain shortly after Northwest pilots ratified a long-term concessionary contract.
The pilots agreed to freeze their defined-benefit pension plan earlier this year and shift to a 401(k)-style plan for future benefits. This month, they ratified an agreement that extends a 23.9 percent pay cut, and makes other contract changes to save Northwest $358 million a year.
"It shows good faith on the part of employees to share the load of turning the company around," Grassley said.
Steenland said Northwest is not asking Congress for any appropriation. Instead, he said, "We want to pay and honor our obligations to those plans." But it needs to stretch out its contributions over a longer period of time, he said.
The Pension Benefit Guaranty Corp., which is funded through premiums paid by businesses with pension plans, would inherit Northwest's pension plans if they are terminated. The PBGC, which was created by Congress, reported late last year that it has a deficit of $25.7 billion, partly because it took over several failed pension plans from airlines and steel companies.