Government to Ensure Pan Am Pensions Paid : Benefits: But many passengers are left in the lurch. And health care coverage for many of the airline’s retirees appears in jeopardy.
Pan American World Airways’ flights were grounded Wednesday, but for many of the company’s customers and employees, some issues were still up in the air.
Disappointed Pan Am ticket holders learned that Delta, Continental and a few other airlines would accept their tickets on a limited basis, but those who could not find seating had to pursue other options.
Gibby, a guitarist with a reggae band known as 809 that performed in San Diego Tuesday night, was to have departed from Los Angeles International Airport on Pan Am Wednesday for a connecting flight to Kingston, Jamaica.
“We don’t know what airline we’re supposed to take or when we’ll get home,” Gibby said.
Hunald Antunes, a businessman whose trip originated in Guatemala, was trying to get to Rio de Janeiro, Brazil.
“The company and the government should think about the passengers and stop selling tickets when they know something like this is going to happen,” Antunes said while stranded at Miami International Airport, Pan Am’s primary flight hub. “I asked American Airlines, but they won’t accept the ticket. Will try Varig now.”
Meanwhile, disheartened Pan Am employees found that the government is guaranteeing most of their pensions, but many health benefits may be in jeopardy, a lawyer for some Pan Am retirees said.
Eva Foldvary, a passenger service agent with 29 years at Pan Am, broke down and cried as she talked about the company.
“We were told that our medical insurance was ended,” she said. “We don’t know if we’ll get our pension, since the company stopped paying into the fund in 1984.”
Ralston Reynolds, a Los Angeles-based crew chief with Pan-Am’s baggage-handling service, expressed concern about the pension of his mother, a Miami-based accountant for Pan Am who was on the verge of retiring after 25 years at the airline.
If Reynolds’ mother and Foldvary are like most Pan Am workers, their pensions will be covered.
Active workers at Pan Am who lost their jobs with the airline’s closure will have their future pension rights protected by the Pension Benefit Guaranty Corp., a federal agency that backs pension plans, if they have worked long enough to be vested. That is usually five years.
Although Pan Am may soon vanish as a corporation, the workers will be able to draw the pension they earned at the firm when they reach retirement age.
The pension agency also said Wednesday that the airline’s shutdown won’t interrupt the monthly checks of retired workers.
The pension agency already seized two Pan Am pension plans in July because they were underfunded by $860 million. A third plan, covering pilots, has not been taken over, “but it is likely we will,” an agency spokeswoman said.
The PBGC “had already acted to protect the pensions and will take every step to assure that workers and retirees receive their benefits as guaranteed by law,” said Diane E. Berkley, deputy executive director of the agency.
The agency anticipated Pan Am’s problems and decided to seize the pension plans last July to establish an early claim to the bankruptcy assets. The airline filed for bankruptcy protection last January in a bid to reorganize. It had hoped to emerge as a smaller airline focused on Latin America.
The agency guarantees payments of pensions up to a maximum of $2,250 a month at age 65. There are approximately 12,000 retirees in the three plans, and virtually all have pensions below the maximum.
However, there may be a couple hundred former flight engineers whose pensions will be reduced because they include benefits above the maximum, according to the agency.
Meanwhile, there were new questions about the strength of Pan Am’s health care programs. Benefits for more than 16,000 former Pan Am Corp. employees will be slashed or eliminated as the carrier winds up its affairs, said Tom Jones, a lawyer for the airline’s retirees.
Pan Am has said it does not have the $900 million needed to continue the health care benefits it has provided retirees while it has been trying to reorganize in bankruptcy court. Even before Delta backed out of an agreement to fund Pan Am’s reorganization, Pan Am had proposed limiting its health care payments to $40 million and compensating retirees with stock in the reorganized company.
White reported from Los Angeles and Rosenblatt from Washington. Times researcher Anna M. Virtue in Miami and Reuter news service also contributed to this story.
