A dispute over ways to help airlines fund their pension plans may delay a measure overhauling the private U.S. pension system when it gets to the Senate, Senate Finance Chairman Charles Grassley said Monday.
Some senators object that Delta and Northwest would get an unfair advantage over competitors Continental, based in Houston, and Fort Worth-based American, Grassley said.
"There's a tremendous amount of concern from senators that have big hubs for Continental and American, and we're going to have to deal with that," said Grassley, R-Iowa. Under the measure as passed by the House on Friday and sent to the Senate, Atlanta-based Delta and Egan, Minn.-based Northwest would get 17 years to pay underfunded pension obligations, compared with 10 for American and Continental.
The House-passed measure would let Delta and Northwest, both in bankruptcy, assume an 8.85 percent annual return on investment in setting the size of their pension liabilities. American and Continental would use a rate tied to bond yields, which now would be about 6 percent.
The higher the rate, the lower the payment carriers would need to make to their plans.
Because of the change, almost the entire Texas House delegation opposed the measure.
"We share the Texas delegation's concern about the competitive aspects of pension reform and appreciate their efforts to prevent the government from picking winners and losers in the airline industry," Continental spokesman Dave Messing said in a statement.
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