Airline pension troubles push pilots to ask to work until 65

John Hughes

Thursday, May 26, 2005 | 9:29 a.m.

Hundreds of U.S. airline pilots are asking Congress to raise their mandatory retirement age to 65, saying the change won't threaten safety and would give workers more time to recover money lost to pension cuts.

The Federal Aviation Administration since 1959 has required that airline pilots retire at age 60. Southwest Airlines Co., JetBlue Airways Corp. and pilots at other carriers, including those with pension troubles, want to extend the limit. Larger airlines and their pilot unions oppose a change.

"I regard it as a moral issue," said Herb Kelleher, Southwest's 74-year-old chairman, who was flanked by about 30 current and retired pilots at a Capitol Hill news conference Wednesday. "We have a bunch of splendid pilots right behind me who would be perfectly safe and totally competent if they were able to fly in our cockpits today."

Some of the biggest U.S. carriers such as US Airways Group Inc. and United Airlines have moved to terminate pensions as the industry posted combined losses of $33 billion over the past four years. Others, including Delta Air Lines Inc. and Northwest Airlines Corp., have sought to spread payments over a longer period to keep plans viable.

Paul Turner, 58, a US Airways pilot, said his expected retirement check fell to about $38,000 a year from $90,000 when the airline terminated pensions in its first bankruptcy reorganization of 2003.

"I cannot afford to retire at age 60 because of what happened to me," Turner, who lives in Charlotte, N.C., said in an interview. "I have to go out and find some other work and start over at that age."

Legislation in the U.S. House and Senate has gained momentum because of pension troubles, Turner said. Pilots whose plans are terminated by the Pension Benefit Guaranty Corp. may get 33 percent less in annual payments because of the age-60 rule, he said.

Increasing the retirement age "could be positive" for pensions, said Sen. James Inhofe, the Oklahoma Republican who sponsored legislation to raise the limit. "If people are able to work a little bit longer, maybe time is in the favor of solvency," he said in an interview.

UAL Corp.'s United, the world's second-largest carrier, won bankruptcy court approval this month of a plan to terminate its pensions and turn them over to a federal agency. The change means $3.2 billion in lost benefits for employees.

The other three largest U.S. airlines, AMR Corp.'s American, Delta and Northwest, back legislation that would let them spread out payments to pension plans to avoid potential bankruptcy filings.

Past efforts to raise the age stalled from a lack of union and industry support, such as in 2001, when then-Senator Frank Murkowski, an Alaska Republican, said an increase would stem a pilot shortage. The FAA, which backs the age-60 rule, will continue to decide the matter unless Congress acts.

The rule "has served the industry well," FAA spokesman Les Dorr said. "There's just no scientific consensus that would give us a basis for changing that age-60 limit," he said. The agency has said pilots' decline in cognitive functions and increased risk of illness over age 60 may affect safety.

The Pension Benefit Guaranty Corp., the U.S. agency that takes over failed pensions, can't ensure pilots get the maximum benefit unless the retirement age is 65, said Jeffrey Speicher, an agency spokesman. Sen. Daniel Akaka, a Hawaii Democrat, introduced legislation that lets the agency treat a 60-year-old pilot the same as 65-year-old workers in other professions.

The Air Transport Association, the Washington trade group for the biggest U.S. airlines, supports the age-60 rule. "It should be up to the FAA" to determine if changes need to be made, said Diana Cronan, a group spokeswoman.

The pilot union for Dallas-based Southwest, with 4,710 members, and a group called Airline Pilots Against Age Discrimination, which includes members from other airlines, are leading the lobbying effort to change the rule.

Pilots from American, United, AirTran Holdings Inc. and ATA Holdings Corp. attended the news conference calling for the change.

"There's no reason to cut these careers short," said Rob Land, JetBlue's vice president of government affairs. JetBlue, like Southwest, doesn't have the defined-benefit pension plan typical of larger carriers.

Southwest's advantages of growth and high productivity enable it to support an age-65 retirement, said Vaughn Cordle, chief executive of Airline Forecasts LLC in Washington. "It's easier for Southwest to support the pilots because they don't have historically lucrative retirement programs," he said.

Raising the age would probably cost the biggest airlines more, because higher salary and benefit payments would outweigh savings from lower training costs, said Cordle, who is also a United pilot.

Kelleher said an airline chief executive once told him he was concerned about the effect of raising the retirement age on the carrier's defined-benefit pension plan. Such plans "are rapidly disappearing in the airline industry," Kelleher said. "So maybe we'll see a change of heart."

Financial "turmoil" in the industry helped persuade the Air Line Pilots Association, the world's largest pilot union, to survey members for their opinion on the age-60 rule, said Pete Janhunen, a spokesman for the union, which represents 64,000 pilots in the U.S. and Canada.

The telephone poll, combined with a Web survey, found 56 percent of pilots oppose changing the rule and 42 percent support a change, the union said in a statement today. The union's executive board decided to continue its 25-year support for the age-60 rule, the statement said.

The Allied Pilots Association, which represents 13,500 pilots at American, also opposes a rule change, said Gregg Overman, a union spokesman. "It's just not something that should be decided on one's personal finances," he said of the retirement age. "It's a safety issue."