The efforts suggest that pilots are ready to play hardball over the issue in the next round of labor talks, starting early next year at American. $164,978,671 (amount of money in the plan at the start of the year and amount at The nine named plaintiffs in this action were mechanics for Defendant Northwest Airlines ("NWA"). Her husband is a retired Northwest pilot, and their family lives on his monthly pension checks. You can find everything printed here in Deltanet Employee Connection (found on Discussions are in early stages, and any changes would require buy-in both by union members and the companies. # A1430. News stories provided by third parties are not edited by "Site Publication" staff. A federal judge has denied dismissal of a lawsuit in which five former employees of Delta Air Lines allege Delta and its administrative committee improperly reduced their pension benefits from the Northwest Airlines Pension Plan for Contract Employees. other Defined Benefit Pension Plans sponsored by the company, in the Master This is a governmental insurance policy for pension plans. information, the likes of which, was completely omitted from the Northwest in 2003, allowing it to reschedule that year's pension contributions over five years. Northwest received a waiver from the I.R.S. Airlines Pension Plan for Contract Employees. No Reproduction Without Prior Authorizations. Delta Airlines warned May 11 that it could soon be forced to file for bankruptcy. Airline pilots used to get a sweet deal. Instead, it reduced the plaintiffs pensions by an amount calculated to accommodate SSDI benefits. If youre like me, you have a flying habit that youll need support. Glassdoor is your resource for information about the Pension Plan benefits at Northwest Airlines. company has met the minimum requirements ($69,417,036 per year) for the years A hearing has been scheduled for later this month in United States Bankruptcy Court for the Southern District of New York, in Manhattan. And yet, airline pilots feel like their companies jumped at the opportunity. Reproduction in whole or in part without permission is prohibited. He said he's worried about insurance in the future, because his 57-year-old wife, Susan, has diabetes. Most airlines now have defined contribution retirement plans like a 401(k). Covered employees are all contract employee groups in this particular defined funding status report for the Contract Employees Plan. Suite 3200 The couple paid off their house and cars, and his wife later went back to work. Northwest continued to operate under its own name and brand until the integration of the carriers was completed . Investment gains (losses) and expenses are allocated to the Plan upon its The active pilots negotiated a new pension plan for themselves," said Lewis, 58, who lives in Duluth. Or, in other words, it was quite an ordinary major airline. Northwest's pension fund consists of three individual plans, for about 8,000 pilots, 9,000 salaried employees and 52,000 unionized workers, including mechanics and agents. A bankruptcy judge on Tuesday approved United Airlines' landmark plan to dump its underfunded pension plans on a federal agency, a move United said it needed to survive but could trigger a damaging strike against the airline company. The name "Delta" would survive the merger, and the combined airline would serve passengers across the US and around the world with its multiple hubs. Save my name, email, and website in this browser for the next time I comment. Airlines have the luxury of planning for pilots to retire at the FAAs mandatory retirement age of 65. If airlines conclude that it is no longer efficient to run an aircraft, then it goes through the retirement process. One was a letter from Delta telling him that, as of Oct. 1, his benefit was zero. Service Provider information is on Pages 25 to 32, compensation for those Northwest retirees worried about their pensions. Northwest Airlines, Inc. Group Medical Plan from Delta Airlines. Some of the delayed contributions are now starting to come due, and the airline has been lobbying Congress to give it still more time. "We don't have an option to say I'm not prepared financially now, I'll keep working until I get there," said Chuck Dyer, chairman of the FedEx chapter of the Air Line Pilots Association. By that time, three other major U.S. airlines Delta Air Lines, United Airlines, and US Airways had already filed for bankruptcy protection. The committee determined that it should deduct $225.81 per month to avoid Leighton receiving both his pension and that additional income each month. But the number of pilots who got zeroed out was larger than many expected, and the requirement to pay Delta for health benefits makes the pill even more bitter. Instead, they were able to convince U.S. bankruptcy courts that their pension funds were insolvent, without any hope of recovery. This information was received from an honorable and we thought we would "I get nothing, and I still owe them $907.". data in it was the amount of money in the fund at the start of the year, Good move from the consumers aspect. "It's going to be tight living off of no income for a year and a half." Northwest's CEO Doug Steenland said the carrier has strong and committed supporters in Congress trying to make the needed changes in pension law. "Because the pension board caps the amount you can receive at something in the mid-$40,000 range. Citing a provision of the plan that requires Delta to offset pensions by the amount of other income-replacement benefits, Delta has reduced each plaintiffs monthly pension by an amount calculated in his workers compensation settlement agreement. Through the course of its over eight decades as Northwest Airlines, it made plenty of misplaced bets, was involved in numerous fatal incidents, and filed for bankruptcy once. Jim Cochran expected bad news when he got the big white envelope from Delta Air Lines. Unlike most employees, retiring Delta pilots until 2005 could cash out half their pension benefits in lump sums that sometimes topped $1 million. none of which pertained to me. United pilots' pension fund was terminated in its 2002 bankruptcy and taken over by the PBGC. Copyright 2005 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. Notify me of followup comments via e-mail. A federal judge has denied dismissal of a lawsuit in which five former employees of Delta Air Lines allege Delta and its administrative committee improperly reduced their pension benefits from the Northwest Airlines Pension Plan for Contract Employees. Cochran, for instance, hopes to soon begin tapping a $1.2 million lump sum that he got when he retired almost three years ago and put into an IRA account. When United Airlines took over Pan American Airways pacific division in 1985, Northwest Airlines enviable position as the leading U.S. airline in East Asia came under threat. Employees caught up in recent pension fund collapses have said they were not adequately warned of the impending failure and have questioned how it could have happened if the people in charge had kept their interests foremost. As a subscriber, you have 10 gift articles to give each month. Very interesting read you have given us about Northwest Airlines. my dad was there 50 years,, if nyrob ran northwest it would still be here today, Your email address will not be published. They won't take her," said Cochran. At that time, in late 2004, Delta had just averted a bankruptcy filing, and waves of pilots were retiring. As Northwest Airlines finally turned a profit again in 1993, it still found itself in a situation where it was lagging behind large competitors in the transatlantic market. But that goal hinges on passage of federal legislation that would allow Northwest to stretch out billions of dollars in required pension fund payments. Page 39 "I plan to live conservatively and keep our costs down and wait for the dust to settle," he said. They can also assume a pilots life expectancy is closer to the U.S. average of about 80 years. On KN Aviation, I share reviews of the flights I take and lounges I visit on top of many other aviation-related articles. Airline officials say they want to avoid handing off their pension obligation on the federal government. "They will look at people like us who retired with a good salary, who have medical insurance, who earned all these things," says Harris. Pan American Air (1991, 1992) 9. Northwest Airlines Retirement Savings Plan for Salaried Employees. Northwest Airlines' bankruptcy filing has raised serious questions among workers and retirees about the pension benefits they've been promised. Retirees would eventually get a payout based on whatever money happened to be in the fund. This factor weighs in favor of plaintiffs, Ericksen wrote in her order. The Pension Benefit Guaranty Corporation insures private-sector traditional pension plans and pays out benefits up to certain limits if the plan fails. The Pension Benefit Guaranty Corporation, which has taken over the failed plans, has gone to court to try to hold some of those companies responsible, but it has little power to act until after a pension fund has failed, and by then it is usually too late to recover much of the missing money. Youre probably as surprised as I was to learn how easy it was for the airlines to escape the burden of funding their pension plans. But Cochran saw two things when he opened the envelope. While it is theoretically possible that the committee made its decision for the purpose of putting Deltas financial interests over the interests of the beneficiaries, plaintiffs failed to plead facts that support such an inference. Unions at American Airlines Group Inc. and Delta Air Lines Inc. are studying ways to reconstitute or replace retirement plans that were scrapped or frozen during the carriers' past financial struggles. An offset is valid under ERISA if it is authorized by the plan. I did some research for the missing information and thought that the honorable Their pension was 60 percent of final average earnings (FAE). Expenses were $194,155,483 (benefits paid). My name is Keishi Nukina, and I am an aviation enthusiast, writer, and photographer based in Japan. It is usually a requirement of the Plan that the amount awarded to the Alternate Payee be expressed in terms of a monthly benefit payable for either the lifetime of the Participant or the Alternate Payee. But McClain said he doesn't believe the Northwest pensions are in jeopardy -- if Congress grants the airline a new, more lengthy payment schedule. There is a lot of interesting information in Hope this helps. crippling the companys expansion efforts. Page 49 of 61. However, companies allow this practice because it allows them to get away with saving less). For an additional 3,000-plus in between, pension cuts range from a few percent to almost 100 percent. from Mr. Kight. 2023 Minnesota Public Radio | All rights reserved, Mark McClain of the Air Line Pilots Association talks with MPR's Bill Catlin about the pension situation. In the Audit, page 46, year ended Sept. 30, 2009, assets $1,738,184,000. "Delta's making enough money to keep the plan," said Lewis. Invest as much as you can for your own future. Plan year 10/01/2008 to 09/30/2009. Delta says about 1,300 retired pilots had their monthly pension checks zeroed out by the pilot pension plan termination. Will ETFs Ever Break Into the Retirement Plan Space. The three biggest U.S. carriers have reported combined adjusted profits of about $47 billion over the past five years. Lewis initially got a $6,500-a-month pension to support himself, his wife and daughter while he launched a boat appraisal business. To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market. "It was just too big a risk," said Lewis. Available to US-based employeesChange location. Internal factors also played a role in Northwest Airlines precarious financial situation in the early 2000s, though. On April 14th, 2008, Delta Air Lines and Northwest Airlines (NWA) announced an agreement to merge and create a $17.7 billion enterprise. Types of QDROs However, if the balance gets too high above the actuarially calculated glideslope, he starts to think the company is trying to get away without paying taxes. the end of the year). Its first international flight was from the Twin Cities to Winnipeg in 1928, according to the Minnesota Historical Society (MHS). document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Hi! This mutual silence suggests that nothing in the clear language of either document supported the committees conclusion. Cochran hoped to have enough of a monthly benefit left to cover his family's health insurance premiums. The carrier continues to pay into a frozen defined-benefit plan for pilots at Northwest Airlines, which it acquired. At the time, the I.R.S. The company currently has a 401(k) program, and union chief Mr. Carey wants to find a way to reclaim retirement income pilots lost as a result of American's 2011 bankruptcy filing. "First and foremost, we have to make sure that the pension obligations are met. Northwest Airlines Corp. (NWA) was a major American airline founded in 1926 and absorbed into Delta Air Lines, Inc., by a merger.The merger, approved on October 29, 2008, made Delta the largest airline in the world until the American Airlines-US Airways merger on December 9, 2013. seventeen year plan passed by Congress allowing Airlines to adjust funding of Further, Northwests ambitious expansion into the burgeoning Chinese market quickly came to a halt with the outbreak of severe acute respiratory syndrome (SARS) in 2002, crippling the companys expansion efforts in its historically significant Asia aviation market. A fund has been "unfrozen" only once, during steelmaker LTV Corp.'s bankruptcy in the late 1980s, he said. I know that United has a hub in ORD and that is close to MSP and DTW (both hubs for NWA). Delta's union leaders have taken "initial steps" to examine options and are looking to hire outside consultants who specialize in retirement plans, according to a memo sent to pilots. "I just knew this was going to be a dead-end battle, which is why I retired.". With its clear post-war focus on Asia, Northwest Airlines adopted the brand name Northwest Orient as it continued introducing new Asia routes and adding capacity with new aircraft. "Termination of the pension plan is among the most difficult decisions Delta has had to make in connection with our restructuring process, and we truly regret the impact this has had on you," Delta said in a letter late last month to almost 6,000 retired pilots. As airline pilot pay has finally made up most of the losses from the last round of bankruptcies, some companies are looking at adding a new type of modified defined benefit plan to give pilots tax-advantaged savings opportunities in addition to the 401(k). The aviation industry Northwest Airlines was faced with as it emerged from bankruptcy was one of high fuel costs and many competitorsnot unlike the environment which had contributed to its bankruptcy filing in the first place. In the meantime, take charge of your own finances. Therefore, she said this factor weighs in favor of the defendants. This prompted Northwest Airlines to expand its domestic feeder network and intensify expansion across the Atlantic, where it was far from as dominant as in the Pacific market. 3.0. The plan defines workers compensation benefits as any periodic benefit payable. The committee argues that because the one-time lump-sum payment settles a claim for a periodic benefit, that one-time payment is also periodic. As he suspected, several months later, the pension plan halted paying out lump sums. losses, employer contributions and benefits paid to retirees. If you look at the UAL pension default, their liabilities to their pension fund was $10Billion. Northwest Airlines route network in Asia quickly expanded, with destinations such as Okinawa, Seoul, Manila, Shanghai, and Taipei added to its offerings. He said their expenses are less than $10,000 a year now, and they banked nearly $1.7 million when he retired two years ago, including savings from his Delta wages and the $1.2 million pension lump sum. Millions of miles of flight later, in 1985, Northwest moved its . All of this 130 E. Randolph St. An S&P index of the five biggest U.S. airlines was little changed at 2:38 p.m. Tuesday, leaving it down 6.1% this year. Home Delta says pilots who got zeroed out already took a major portion of their pension benefits when they left the airline. But Delta moved to terminate the pilot plan anyway, and its pilots union had agreed not to object as part of a new contract deal. Thats a Good Thing, A Better Way to Fund Electric Aircraft R&D. In the motion, Northwest said it was "willing to cooperate fully" with the Labor Department but not unless the government gave it more forceful guarantees that confidential financial information would be kept private and not used "as leverage to pressure" it. If you want to request a wider IP range, first request access for your current IP, and then use the "Site Feedback" button found in the lower left-hand side to make the request. The committee argued that because the lump sums represent a monthly payment for the rest of each plaintiffs life, they are equivalent to retirement income. Notably, Northwest Airlines was the first U.S. airline to launch flights to mainland China after the Chinese Civil War, with one-stop services to Shanghai commencing in 1984. Based in Tampa, Florida, he instructs in the Icon A5 and anything else he can get his hands on. Continental Airlines' plan was frozen before it merged with United, which continues to administer that fund, the union said. His writing is focused on personal finance for pilots with the goal to help all types of aviators enjoy great careers, sometimes in spite of themselves. He is also an Air Force reservist and has flown more than 300 combat missions over Afghanistan and other garden spots. This is what happened to most U.S. airlines in the aftermath of the tech bubble burst and 9/11. Delta, the second-biggest U.S. carrier, said it already has industry-leading retirement benefits, but wouldn't comment specifically on pensions. expressed concern about a flood of requests from companies, and some union-run plans, to waive or postpone their mandatory annual contributions. Will Buergey, the former union chairman who is appealing termination, believes most retirees' incomes will be much lower than Delta's estimates. Although some may still be displeased with the Northwest Airlines brand no longer being around, the eventual fate of both Delta and Northwest turned out much better than many had ever envisioned with both companies in bankruptcy protection. While Northwest Airlines evolved to become much more than a domestic and transpacific airline, it remained a pioneer in the Asian aviation market throughout its history as an independent airline. Weirton Steel (2004) [See Jobs With the Best Retirement Benefits .] If our laws were able to look long-term, and airlines had been more confident in their ability to survive through to better times, they might have been able to just skimp through those tough years. None of the figures jive for the present value of the Plan as of September 30, The carrier continues to pay into a frozen defined benefit plan for pilots at Northwest Airlines, which it acquired. We recently examined the Four Percent Rule, the idea that if you only spend 4 percent of your nest eggs initial value per year, it should last you at least 30 years. 53 of 61. "They are making half a million dollars an hour, every hour of the day, every day of the year, every month, all year long," Mr. Carey said. Some of these plans are overseen by the Pension Benefit Guaranty Corp. Because American was created by the merger of several companies, some pilots there had pensions terminated or frozen, while others never even had a plan. Page 15 of 61. Retirement benefits at United Continental Holdings Inc., which is already in contract talks, have been and remain an issue for labor discussions, said Greg Everhard, a spokesman for the pilots union. "The management didn't take any hits on their pensions. Trust. Federal law currently requires the company to pay off most of that shortfall within the next three years. I know that NWA had a southern hub in MEM, and Delta finally dehubbed MEM, because ATL was so close to MEM, and ATL is DAL largest hub. investment gains (loses) and Plan contributions from Delta, Plan assets at the Contribution from Delta Airlines was $77,621,712. The Plan had a net loss of Thats not to say that the story of Northwest Airlines is one of immense success, either. The industry has been in perpetual crisis. $194,155,000. "We are determined to continue to push for that legislation, so that we'll be in a position to preserve pension benefits that our employees have earned to date," said Steenland. But Northwest Airlines, which filed for . He said a pension default affects the retirement income of some employee groups more than others. The aviation industry Northwest Airlines was faced with as it emerged from bankruptcy was one of high fuel costs and many competitorsnot unlike the environment which had contributed to its bankruptcy filing in the first place. Home Net investment loss from the Northwest Airline Pension Plan for Contract Employees portion of the Master Trust was $31,409,821. Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.