Two US senators have demanded employee pension data from American Airlines and Continental Airlines, after it was revealed a last-minute change in pension laws was inserted into a military funding bill approved two weeks ago.
That change — snuck into the Iraq War funding legislation approved by Congress on May 24 — would reduce cash contributions American and Continental, along with a handful of smaller carriers, would have to chip in towards their employee pension funds. Over time, the provision amounts to a savings of $2 billion — all for the airlines.
Senate Finance Committee Chairman Max Baucus (D-MT) and Iowa Republican Charles Grassley (shown below) demanded the airlines turn over their pension data.
“These two airlines flew around the Finance Committee to get this pension provision in the spending bill, but we will review in the light of day exactly what deal they got,” Baucus and Grassley said in a joint statement, reported by CNN.
American and Continental have asked Congress for interest rate breaks and other pension changes for almost a year, since Congress overhauled corporate pension funding rules.
Both carriers said the changes were needed to give them parity with carriers like Northwest and Delta — which had the advantage of renegotiating, or dumping, their pension plans while under Chapter 11.
On the other hand, American and Continental were able to avoid bankruptcy while restructuring their operations. They say that puts them at a competitive disadvantage, as current pension requirements penalize the carriers for not resorting to filing for bankruptcy.
Baucus said he would investigate the matter, to see if the changes snuck into the war funding bill are fair. It’s unclear whether the lawmakers would seek to overturn those changes, though.