FOR IMMEDIATE RELEASE
September 15, 2005
PBGC News Division, 202-326-4040
Statement of PBGC Executive Director Bradley Belt on Airline Bankruptcy Filings
"Northwest Airlines and Delta Airlines are required to make minimum pension contributions under ERISA and the Internal Revenue Code. Northwest and Delta continue to be responsible under the law for making their pension contributions. If those contributions are not made, workers and retirees will be placed at greater risk of losing promised benefits. The financial challenges facing the airline industry are significant, but nothing in the bankruptcy code requires companies to skip their pension funding payments. Indeed, these companies will continue to pay for fuel, wages, health care, utilities and aircraft leases. As long as companies remain in operation with ongoing pension plans, they have a legal obligation to meet their funding requirements."
The Pension Benefit Guaranty Corporation also has preliminary estimates of the pension funding status of the companies' pension plans. They are as follows:
|
|
Delta Airlines |
Northwest Airlines |
|---|---|---|
|
Assets |
$6.9 billion |
$5.8 billion |
|
Liabilities |
$17.5 billion |
$11.5 billion |
|
Underfunding |
$10.6 billion |
$5.7 billion |
|
PBGC Loss |
$8.4 billion |
$2.8 billion |
|
Employee Loss |
$2.2 billion |
$2.9 billion |
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits for about 44 million American workers and retirees participating in over 31,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGCfs investment returns.