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Mar16
NWA Turn Over Pension Papers to Feds
Northwest Airlines said on Wednesday it has turned over documents to U.S. authorities investigating whether it managed its pension plans properly as it slid toward bankruptcy and has resolved a dispute with the government over providing more information.

pic-paper-piles.jpg The airline, which earlier said it withheld some documents and other information from the Labor Department over confidentiality, said late on Wednesday it had reached an agreement with the agency on Monday which would insure its cooperation.

Northwest said it "manages its pension plans in full compliance with the law".

The airline also said it would not seek to terminate its pension plans if Congress approved legislation that would permit struggling airlines to stretch their contributions over a longer period than is currently allowed by law.

"It is important that this legislation move quickly," the carrier said in a statement.

Northwest had not definitively pledged in bankruptcy to continue its pensions if it received relief from Congress. Those plans are severely underfunded, meaning liabilities far exceed assets.

 



The Labor Department issued a subpoena in January seeking much of the same information on various pension plans that the airline had already turned over to the Pension Benefit Guaranty Corp., the agency that insures corporate pensions. The PBGC is a creditor in Northwest's bankruptcy.

Northwest's plans were underfunded by $5.7 billion when it filed for bankruptcy last September, the PBGC said. Two months before filing its petition, Northwest said in a securities filing that it faced $2.5 billion in estimated pension contributions in 2006 and 2007.

The day before its filing, Northwest was required to make a payment of about $59 million to plans covering its contract and salaried workers and has not met its overall pension obligations, the Labor Department said.

"The Department of Labor is greatly concerned about underfunded defined benefit pension plans and plan sponsors' recent efforts to walk away from their commitments to provide their employees and retirees the benefits they were promised," the agency said in a statement.

US Airways and United Airlines both shed their pension plans in bankruptcy to save money and restructure. Bankrupt Delta Air Lines  said this week it would likely try to dump its pilots' plan even if Congress gives the industry extra time to make contributions.

The Bush administration has opposed help for specific industries in the pension bill. Last week, President George W. Bush said companies must keep their pension promises.

The Labor Department, Northwest said, is demanding documents, written communications and meeting minutes relating to discussions leading up to the company's Chapter 11 filing. The agency wants information that dates to January 2002.

According to a copy of the subpoena, Labor officials want information related to pension plan contributions as well as analysis about the airline's ability to make those payments. They also want information relating to Northwest's decision to seek bankruptcy and about the performance of pension plan fiduciaries.

"This inquiry should not be construed as an indication that any violations of law have occurred," according to a letter from the Labor Department's Employee Benefit Security Administration to to the airline.

Northwest, which has called the request overly broad, said it so far had only turned over non-sensitive information to labor officials. But with the confidentiality agreement in hand the company said it intends "to cooperate and supply the information they have requested."

Yahoo! News


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