05/06/2003 - Updated 07:47 AM ET NWA president testifies pension proposal is crucial By The Associated Press Northwest Airlines President Doug Steenland told a federal panel Monday that the company faces escalating pension fund obligations just when it needs cash "to weather the current economic crisis." As skeptical employees listened, he urged the five-member Labor Department panel in Washington, D.C., to approve Northwest's request to cover more than $220 million in pension fund shortfalls with yet-to-be tradable stock in a subsidiary, Pinnacle Airlines. Steenland called the proposal "crucial" to the firm's turnaround strategy. A representative of Northwest's pilots union gave conditional support for the plan, but more than 15 other Northwest labor representatives and workers who traveled from as far away as Honolulu, Hawaii, and Anchorage, Alaska, voiced suspicion and distrust. Northwest is seeking permission for a tactic used only twice before ? by Pan Am in 1989, shortly before that airline's collapse, and successfully by the General Motors Corp. in 1994. During an unusual, daylong session, executives, union members and retirees of Northwest ? a company with a history of tumultuous labor relations ? squared off in public. Steenland said the plan to transfer Pinnacle stock to three of its pension plans would help the airline preserve its $2 billion in cash and thus would be "in the interests of the Northwest pension plans and our workers and retirees." He said Northwest has already obtained a waiver from the Internal Revenue Service allowing it to pay about $450 million in 2003 pension obligations over five years. Steenland described Pinnacle, which flies smaller passenger jets between outlying cities and Northwest's three hubs in Minneapolis, Detroit and Memphis, as one of the fastest-growing regional airlines. None of the three pension plans for pilots, salaried employees and Northwest's other contract unions would exceed the federal limit of having 10 percent of its assets invested in Pinnacle stock, he said. The exemption is needed, he said, only because of technical rules: Federal law requires that people independent of a company own at least 50 percent of any employer stock held by a pension plan. Northwest plans to make Pinnacle's stock public, he said, but it currently owns all of the stock. Tom Goebel, a Seattle-based Northwest co-pilot representing its Air Line Pilots Association unit, said the union sees the industry's current malaise as "a temporary impediment." "We want Northwest to be able to preserve its liquidity," he said. "A strong Northwest is the best protection for the pension funds." But Paul Volker, a Northwest mechanic who drew applause from dozens of employees in the room, characterized the arrangement as "a house of cards." "Pinnacle would be eliminated if Northwest were to cease to exist," he said. The public record in the Labor Department proceeding will remain open until May 16. After that, the panel of department lawyers and pension specialists will make its decision. Labor Secretary Elaine Chao, a former Northwest director, has recused herself from the panel. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.cso.gov.tt TnT Webdirectory: http://search.co.tt *********************************************************