My view on Senate hearing on US Airways pension problem

C

chipmunn

Guest
Yesterday U.S. Senator Arlen Specter (R-PA) meet with the US Airways ALPA MEC and union members in Pittsburgh and then he and fellow Pennsylvania Senator Rick Santorum (R-PA) held a Senate Appropriation Committee’s - Subcommittee on Labor, Health, Education and Human Services hearing on US Airways underfunded pilot retirement plan.
The hearing had two panels of witnesses. The first panel consisted of Steve Kandarin, PBGC Exeuctive Director and Jim Keightley, PBGC General Counsel. The second panel consisted of Jim Roddey, Allegheny County Chief Execuitve, Dave Siegel, US Airways CEO, Captain Duane Woerth, ALPA President, and Captain Bill Pollock, US Airways MEC Chairman.
The hearing began with a short opening statement from Specter followed by prepared marks from Kandarin. Specter and Santorum then grilled the two PBGC representatives for about an hour disputing everything the PBGC representatives presented.
Kandarin and Keightley’s contention is if US Airways restoration plan is approved that it may set a precedent that could sometime in the future be used by other companies to hurt the defined benefit pension plans of 44 million other people covered by similar retirement plans. However, when pressed by Specter, these two men could not provide any scenario(s) as to how that could happen.
Specter then strongly pressed the PBGC representatives as to whether there are provisions under the statutes that govern the PBGC that would keep them from allowing US Airways to restructure the pilot pension plan and they reluctantly agreed that there wasn’t. Therefore, these two men have unilaterally decided (although it’s likely there has been Bush Administration input led by Secretary of Treasury Snow) to not to allow US Airways to proceed with its restoration funding plan because they didn't feel there was language in the statutes that would allow this option to proceed.
Specter asked Kandarin if the pilot pension fund was distressed terminated what would be the obligation to the PBGC and taxpayers and he responded “$500 million and if all US Airways pensions were terminated $2 billion.â€￾ Specter asked the PBGC representatives, “wouldn't it make more sense to everyone if US Airways were allowed to restructure their plans so as to not default on it?â€￾ Interestingly, Kandarin and Keightley could not provide an honest and straight-forward answer to the question.
Next Specter asked the PBGC representatives if congress had ever given the PBGC bailout money because the federal employee pension funds were underfunded. Reluctantly Keightley and Kandarin agreed that in 1974 congress authorized a federal bailout of federal government pension funds, that cover both Kandarin and Keightley’s pensions, however, the federal government never touched the line of credit because market conditions improved.
Does this seem like a double standard?
Specter then called the former PBGC General Counsel to testify, who interestingly is the same individual that wrote the PBGC Statues and he testified that “the statues were intentionally left vagueâ€￾. He said the statutes were written to provide leeway for the PBGC to extend consideration in case of unusual cir***stances such as what US Airways has encountered after September 11 and the great strides that have been taken at the company to restructure. He said the PBGC was wrong to stop the company’s pension restoration efforts and should allow the plan to be restructured.
>From this observer’s perch, I find it interesting that the man who wrote the statute agrees with the pilot retirement restoration plan funding agreement.
The two bureaucrats disagreed and the Specter said what we have here is “bureaucratic intringenceâ€￾ and the Senator was notably upset with the PBGC’s position.
At this point it was obvious to those in attendance that these two PBGC officials currently had the power and authority to approve US Airways restoration funding request when Kandarin said there is “no (statute) language we cannot do this.â€￾ However, it was readily apparent the PBGC is not going to change their mind and the only way the pilot pension can be saved is through legislative action.
At this point the next panel of speakers where called to the witness table where Roddey was first to speak and he provided prepared remarks on the importance of US Airways to Pennsylvania and the East Coast.
Roddey was followed by Siegel who said the pilot pension plan, as it now stands, would not allow the company to successfully emerge from bankruptcy. Siegel said that it was the pilot’s portion of the plan that was in jeopardy and the “rest of the employee plans were O.K.â€￾ He then stated that the Alabama Retirement Fund and US Airways agreements with Credit Card Companies have forced the airline to have a very tight time line to emerge from bankruptcy. Siegel continued that since the PBGC had not granted the restructuring of pilot’s retirement, then they had no choice but to terminate the plan to emerge from bankruptcy. Siegel said he would attempt to negotiate a new plan with ALPA.
PBGC guidelines require 60 days notice of an employer’s intention to terminate a plan; therefore, if US Airways intends to emerge from bankruptcy by March 31, the company would have to terminate the pilot retirement plan by January 30, but this would violate the pilots contract.
The next two witnesses were Woerth and Pollock who gave excellent speeches on the company and industry problems and Woerth said the “pilots were very pragmaticâ€￾. The US Airways pilots have provided $566 million in annual savings and have agreed to two pension cuts. The first cut came during the restructuring agreement where their pay cuts up to 37 percent would lower final average earnings (FAE) and retirement pay outs and the second cut was in the modified restructuring agreement. This cut reduced the defined benefit multiplier by 1.8 percent and capped the pay out at 50 percent of FAE. This reduction provided US Airways with another $77 million per year in savings for a total of $643 million per year, which represents the single largest union concession in the history of the airline industry.
Following the prepared statements Specter then asked Siegel what could happen to the pilots retirement plan and in most observers view Siegel “torpedoedâ€￾ the legislative movement to save the pilots pension. Siegel said he advised ALPA that the pilots pension plan might have to be terminated and replaced with a defined contribution plan. Specter then asked Siegel what would the pay out be and Siegel said it would be lower than the second retirement cut. Specter seemed to be caught off guard by Siegel’s remarks, but after the meeting ALPA made it clearly known to both Santorum and Specter that either by accident or more likely by design Siegel pulled the “rug out from the argumentâ€￾.
Why? It is in the company’s best interest to have the pilot’s pension plan “distressed terminatedâ€￾ because the company would not have to pay $300 million per year for the next seven years plus $1 billion per year for the next 30 years to properly fund the plan. However, many people believe this argument is flawed because US Airways pension shortfall is due to five issues: September 11, the government imposed closure of Washington National Airport, interest rates at 41 year lows, the strongest and most sustained stock bear market, and the sluggish economy. These issues are either one time or cyclical events that will likely cure them self and permit the fund to be adequately funded in the future, maybe without any future US Airways funding action. In fact, in 2001, just two years ago the pilots pension was over funded at 104 percent and the company has made every required contribution in the history of the fund.
At the conclusion of the hearing Specter said he and Santorum would continue their work for a legislative solution to the problem and there would be another hearing on January 16, and presumably he would introduce legislation to force the PBGC to accept US Airways retirement fund restoration plan.
In an interview with reporters following the hearing Siegel said, “We don't have a lot of time, probably a couple of weeks. Either way, there will be a solution to the problem that allows us to successfully emergeâ€￾ from bankruptcy. However, “Any protracted legislative process will simply be too late to accommodate the very tight timeline of our emergence plan. The time that we have to resolve this is very short. The airline’s equity sponsor and other lenders expect a resolution to this matter within days, not weeks or months.
Meanwhile, following the hearing US Airways ALPA spokesman Roy Freundlich disputed Siegel’s comments when he told reporters, “The company has the habit of accelerating timelines to the point that labor-friendly solutions cannot be reached. We have enough time to pursue a legislative solution and we’re going to continue on that track. We're not interested in a company solution that guts our pension plan. The hearing on Thursday (bankruptcy hearing for the court to approve the disclosure statement to permit US Airways to merger from bankruptcy by March 31) is not on the reorganization plan itself. We still have time to pursue a legislative solution and that's what we're going to be doing.â€￾
Allegheny County Chief Executive Jim Roddey told the Pittsburgh Tribune Review before testifying before the subcommittee, Congress probably will address this issue sometime during the year, but it won't be done in time to help US Airways.â€￾
>From this observers perspective and after talking to MEC representatives and union members, the majority of the pilots may not be interested in a “defined contributionâ€￾ solution and for the first time in my career, I have witnessed a sentiment shift because the majority of pilots at the hearing are saying “no moreâ€￾ and that there must be a legislative order to change the PBGC’s position.
Chip
 

savyinvestor

Senior
Jan 15, 2003
494
0
www.usaviation.com
Sorry Chip. 44,000,000 Americans aren't going to put their retirements at risk so U pilots can get their million dollar pensions. As one of those 44,000,000 I'm contacting the Finance committee and demanding they make no exceptions for U. If you make an exception for one than you have to make exceptions for all. If ALPA negotiated one of those" its not what your worth, but what you negotiate contracts" its ALPA's problem not ours. If U can't pay take less. Don't put others pensions at risk to save yours!
 

diogenes

Veteran
Aug 22, 2002
2,515
0
Chip, my good man, you are about to have a heapin' helpin' of your own words fed back to you. Despite my strong desire to serve up a few myself, I will not.

The nasty side of me that says ALPA, in it's dealings with the company and other labor groups, brought this on itself. Turnabout is fair play, oh how the mighty have fallen, etc.

The better angel says an injury to one is an injury to all. If I stand by silent in your hour of need, who will stand with me in mine? (although to date, we've been very much on our own) I have deep sympathy for my union brothers and sisters during this crisis. It is unconscionable to have been promised a pension all these years (and paid for with your deferred wages), to have it taken away. It is flat out wrong, and in my view, theft. I understand your rage - my group went thru it in the mid 90's. Unfortunately, it appears DBRP's are numbered in this land, to the detriment of every working family in America. That it has come to this resides, in part, to a failure of unionism. Wouldn't it be nice for the unions to set aside their intra-mural scrum, and advance the cause of working folks? Isn't it in***bent, now more than ever, for working folks to set their cultural differences aside, and demand better of our elected officials?

Does ALPA leadership finally understand we all are in this together? Or will they continue in their self-serving ways, at the expense of others?

Judo's basic fundamental is to turn and use another's blow against them. It appears Dave and Jerry hold black belts, while ALPA is wanting the number of the bus that just ran over them.

And don't take it personal ALPA guys and gals; they put the 'fighting machinists' on the mat along side you.
 
OP
C

chipmunn

Guest
US Airways' plan would remove the obligation from the PBGC and place the restoration burden on the company. If the plan is "distressed terminated", the PBGC said it and the taxpayers would on the hook for $500 million for the pilots and $2 billion for all employees.

Expect a bill to be presented on the Senate floor shortly, which would provide a legislative solution to spread out US Airways restoration funding.

There is significant behind-the-scenes activity that is going on today to move this action forward.

Chip
 

ual06

Senior
Aug 30, 2002
331
0
I am lost on this thing. As I understand, if the plan is put into a "distress termination", the PBGC will take all assets of the plan and guarantee a retirement of about 25%, of original expectations, to each pilot participant. I cannot imagine that the plan is only 25% funded.

It is beginning to appear that the assets of the plan is looking like a ripe fruit on the vine, ready to be picked and mostly consumed by Uncle Sam.
 

diogenes

Veteran
Aug 22, 2002
2,515
0
I must say the picture of alpha male, Type A, ALPA types going, hat in hand, to a Republican, 'let them eat cake' Congress for a bailout to be ironic.

Should be interesting.

Cynicism cannot keep pace with the headlines.
 

us10

Advanced
Sep 11, 2002
138
0
Ual06,

After a distress termination the PBGC will take control of the plan assets.Forget about your contractual method of benefit establishment and distribution.No one is made whole however some pilots will make out better than others,it is not a linear distribution process.

I suggest you contact your ALPA benefits specialist to get fully briefed.
 

ClueByFour

Veteran
Aug 20, 2002
3,566
37
www.usaviation.com
[blockquote]
----------------
On 1/15/2003 12:25:16 PM chipmunn wrote:
From this observers perspective and after talking to MEC representatives and union members, the majority of the pilots may not be interested in a defined contribution; solution and for the first time in my career, I have witnessed a sentiment shift because the majority of pilots at the hearing are saying "no more"; and that there must be a legislative order to change the PBGC's position.

Chip
----------------
[/blockquote]

I hate to tell you this, but it really does not matter what the pilots are interested in. US will distress the pension, and if necessary, seek contractual permission to do so from the very judge that "has turned down no company motion."

The legislative solution is novel and probably the best route; however, it won't happen under the necessary timetable, and it is grossly unjust to give a "one shot pass" to US, and not the hundreds of other companies whose pension funds are grossly underfunded due to the current state of the economy.

Were it me, I'd start negotiation with management right now to try to save what is currently funded and move to a defined contribution plan while there is still time.
 

ual06

Senior
Aug 30, 2002
331
0
Yes, if the PBGC takes over, they will do it their own way. But a pilot must retire at age 60. Statutory limitations puts a 60 retiree at a maximum of $2382.10 per month under PBGC. Way below expected and what the fund is basically funded for. I just cannot see how the assets of the plan today would not cover that very easily. Hence, where in the world does a $500 Million liability to PBGC come from.
 

us10

Advanced
Sep 11, 2002
138
0
[blockquote]
----------------
On 1/15/2003 2:07:47 PM ual06 wrote:

Yes, if the PBGC takes over, they will do it their own way. But a pilot must retire at age 60. Statutory limitations puts a 60 retiree at a maximum of $2382.10 per month under PBGC. Way below expected and what the fund is basically funded for. I just cannot see how the assets of the plan today would not cover that very easily. Hence, where in the world does a $500 Million liability to PBGC come from.



----------------
[/blockquote]
The PBGC has established priority categorys in their distribution method.For all practical purposes age 53 and older retired or active makes up the first group.The plan assets (estimated for U to be just north of 50%of fully funded-UA around 60%)are applied to this group first.In U's case the money will run out here leaving nothing to "spill" over to the next group which is everyone else.At this point in this sad tale the PBGC maximums come into play, the PBGC ante's (their estimate 500 million) up and these pilots get royally screwed.
 

mlt

Senior
Dec 2, 2002
291
0
www.usaviation.com
Chip,[BR][BR]As I have stated numerous times I find no pleasure in the disappearance of ALPA's pension. My ire toward your postings have been twofold. First, Mr. Siegel has been doing this very thing 'torpedoed' the weaker organized groups since he came on the property. Second, your postings portrayed him as the second coming of Jesus, when the rest of organized labor knew what he was doing behind the scenes. I do not know one person who wanted US Airways to fail; only to be fair. My sympathies. [BR][BR]I stated in a previous post, "they played us beautifully".
 

oldiebutgoody

Veteran
Aug 23, 2002
2,627
945
www.usaviation.com
[blockquote]
----------------
On 1/15/2003 1:14:09 PM savyinvestor wrote:

Sorry Chip. 44,000,000 Americans aren't going to put their retirements at risk so U pilots can get their million dollar pensions. As one of those 44,000,000 I'm contacting the Finance committee and demanding they make no exceptions for U. If you make an exception for one than you have to make exceptions for all. If ALPA negotiated one of those" its not what your worth, but what you negotiate contracts" its ALPA's problem not ours. If U can't pay take less. Don't put others pensions at risk to save yours!
----------------
[/blockquote]
Savvy,
You're sadly misinformed if you think this is only a U pilot issue. Here are the choices (you can multiply them many billions of times as they pertain to pensions throughout the US, and quite possibly yours): The government allows U to continue the pensions, funding it in such a way as to keep the government happy, while providing ALL benefits to employees, or, liquidate the pension, putting ALL retirements and pension benefits in the hands of the government, forcing taxpayers to make up any amount NOT covered by the liquidated funds (up to 2 billion for U alone). You see, those are the choices; there is no other. Seems to me that allowing the company to fund the pensions in a "creative" way is best for everyone, except those who wish defined benefit pensions to go the way of the dodo bird. Apparently this is a major goal of the present administration, so if you have one they'll be after yours soon enough. A stipulation could be placed on the fund by the government that all profits on fund investments must remain in the fund until the pension fund reaches some preset limit, say 130% of funding requirements. This would preclude the company from "stealing" the funds to finance operations. One thing that I find particularly interesting and troubling at the same time is the haste with which the company wants this settled. Is there some sort of ulterior motive here?
 

RowUnderDCA

Veteran
Oct 6, 2002
2,123
1
www.usaviation.com
[blockquote]
----------------
On 1/15/2003 1:19:37 PM ual06 wrote:

I am lost on this thing. As I understand, if the plan is put into a "distress termination", the PBGC will take all assets of the plan and guarantee a retirement of about 25%, of original expectations, to each pilot participant. I cannot imagine that the plan is only 25% funded.


It is beginning to appear that the assets of the plan is looking like a ripe fruit on the vine, ready to be picked and mostly consumed by Uncle Sam.
----------------
[/blockquote]

I'm guessing that you're right that if the PBGC 'takes over' any pension plan, then the PBGC takes both the risk that the plan will shrink in value, as well as possibly increase in value?

I could see how this would be a very difficult pill to swallow, if true. So, if the PBGC 'takes over' any of US's pensions, will the PBGC be obligated to adhere to the payout terms UP TO a maximum payout, regardless of the financial returns of the investments? If this is true than some of the plans that the PBGC takes over might be a net positive for the PBGC, right? Taking plans and immediately reducing their payout to the PBGC maximum would be a windfall for the PBGC, most likely, right? Surely, the PBGC doesn't have the same time horizon that US has... they can wait for the investments to come back, right?

I think that I understand that it is illegal for U to adjust downward pension benefits already accrued.... so then the $3.1 billion underfunding can't be affected by much more than improved financial performance, or (not to be too macabre) undercollection of benefits.

Boy, that does seem harsh. But all risk pools require some to pay more and others to pay less. I think that PBGC is protecting their 'pool'... hmm?
 
OP
C

chipmunn

Guest
US Airways ALPA MEC code-a-phone update - January 15, 2003

This is Roy Freundlich with a US Airways MEC update for Wednesday, January 15.

Yesterday, ALPA participated in meetings on US Airways pension plans funding issues called by U.S. Senator Arlen Specter in both Pittsburgh and Washington, DC.

In the Pittsburgh meeting, at the landside terminal of the airport, your MEC representatives explained to Senator Specter, along with U.S. congressman Tim Murphy and Pennsylvania state congressman John Pippy, that the US Airways pension plans are currently underfunded due to a combination of events, which include the effects of September 11, 2001, on the economy and aviation industry, the decline of the stock market, and 41-year-low interest rates. These financial events have rapidly created a funding shortfall of $3.1 billion dollars due over the next eight years, with $1 billion dollars being due from US Airways in 2004, and $800 million dollars in 2005.

US Airways maintains that if it meets its current pension funding obligations, then the business plan it submitted to the ATSB would no longer be valid. The ATSB is requiring that the pension funding issue be resolved with the Pension Benefit Guaranty Corporation (PBGC), which has taken the position that it does not have the authority to help. That position has not been accepted by ALPA or Senator Specter.

Without the PBGC’s authorization for restoration funding, US Airways pilots, on top of tremendous job losses and pay and work rule concessions, could now be stripped of nearly all of our defined pension benefit - a benefit pilots have spent decades to earn.

ALPA explained to legislators that US Airways pilots have sacrificed a great deal to ensure that US Airways would survive and have already participated in two rounds of concessionary negotiations. During these negotiations, the pilots provided the Company with the bulk of the concessions, $643 million dollars per year, to enable US Airways to receive approval for the ATSB loan guarantee. Until our pension issue is solved, however, the ATSB is refusing to provide the $1 billion loan guarantee for which US Airways applied and already received unanimous conditional approval last summer.

Later yesterday afternoon in Washington, at the Subcommittee on Labor, Health, Human Services and Education of the Senate Committee on Appropriations hearing, which was chaired by Senator Specter and included Senator Santorum, testimony on the pension issue was received from the PBGC Executive Director Steven Kandarian, PBGC General Council James Keightley, Chief Executive of Allegheny County Jim Roddey, ALPA President Duane Woerth, MEC Chairman Bill Pollock, and US Airways President and CEO David Siegel.

ALPA’s testimony at the hearing was consistent with its presentation of the issues to Senator Specter at the earlier meeting in Pittsburgh.

The PBGC’s senate subcommittee testimony took the position that the statutes and regulations governing its charter did not specifically authorize it to allow a restoration-funding program to enable a pension fund’s benefits to survive. This position was aggressively challenged by counter-testimony articulating that the statutes and regulations did not prevent the PBGC from taking corrective action and indeed provides the latitude for it to do so at its discretion.

PBGC Executive Director Steven Kandarian expressed no faith in US Airways’ business plan and the pension restoration plan that would defer funding obligations over 30 years. Mr. Kandarian was more concerned about preserving his impression of the intent behind restricted IRS funding wavers, which are not being sought by US Airways or ALPA. He was also concerned about protecting the PBGC insurance program from possible abuses because of the precedent he felt would be set by selectively resolving US Airways pension plans’ underfunding status. While the PBGC recognized that the pension plans were severely impacted by 41-year low interest rates and the sharp decline in equity markets, it also believes that US Airways, over the course of several years, did not make appropriate funding contributions beyond the minimum required by law to ensure the integrity of the pension plans in cyclical markets and economic conditions moving forward.

The PBGC also stated that the only pension plan in jeopardy of being terminated by US Airways is the pilots’ pension plan.

President and CEO David Siegel’s prepared testimony was supportive of a legislative solution, but saddled the effort by trying to compress the timeline for a legislative solution to a couple of days. The Company is attempting to use the January 16 bankruptcy hearing on the adequacy of the information contained in the Plan of Reorganization’s disclosure statement as a deadline to begin the final termination of the pilots’ pension plan. During the question and answer period, Mr. Siegel testified that the Company could provide an alternative pilot pension plan that “matched the economics†of a restored defined benefit plan.

Captain Duane Woerth responded to this statement stating that any alternative plan is a function of collective bargaining that is done under the collective barging provisions of the Railway Labor Act and not at a senate subcommittee testimony.

Captain Pollock responded that a Company-generated alternative pilot pension plan [which would likely be a defined contribution plan], would be significantly inferior to a restored pilot defined benefit plan

By pursuing this alternative, the Company would absolve itself of its obligations to the pilots’ pension plan and turn it over to the PBGC upon termination. The Company would then seek to construct a defined contribution plan using the funding available in its ATSB business plan. While the economics may be matched for the Company, it will not be matched for pilots.

Your MEC is continuing to pursue a legislative solution. A grass roots letter writing campaign was suggested by a legislator and is being developed by ALPA. Guidelines to participate should be posted by Friday.

The MEC would like to thank the US Airways pilots that attended yesterday’s meetings to demonstrate strong pilot support for a legislative solution. Over 100 pilots attended the Pittsburgh public meeting and approximately 60 pilots attended the Washington senate hearing.

Please remember we have 1,748 pilots on furlough, with 79 pilot furloughs scheduled for February 4.

ALPA-US Airways MEC Pension Plan Statement - January 14, 2003

US Airways and its employees have been involved in major restructuring efforts to gain Air Transportation Safety Board (ATSB) approval for a $1 billion federal loan guarantee. The Company and its employees have participated in the US Airways restructuring plan to meet the ATSB’s conditions for cost savings and revenue enhancements. Now, through no fault of labor, the ATSB loan approval is in jeopardy because of federal pension funding requirements.

The US Airways pilot pension plan is currently underfunded due to a combination of events: the effects of September 11, 2001, on the economy and aviation industry; the decline of the stock market; and 41-year-low interest rates. These actions and financial events have rapidly created a funding shortfall, and based on US Airways’ estimates, it must pay over $3.1 billion into its retirement plans over the next eight years.

US Airways is still working to emerge from bankruptcy and is requiring an ATSB loan guarantee to provide necessary exit financing. US Airways states that if it meets its current pension funding obligations, then the business plan it submitted to the ATSB would no longer be valid. The ATSB is requiring that the pension funding issue be resolved with the Pension Benefit Guaranty Corporation (PBGC), which has taken the arguable position that it does not have the authority to help.

The PBGC’s mission statement says that it protects the retirement incomes of American workers’ private defined benefit pension plans and encourages the continuation and maintenance of defined benefit pension plans. To help US Airways attain a 30-year deferred-funding schedule from the PBGC, ALPA agreed to modify pilot pension benefits, including reducing the maximum final average earnings benefit by 15 percent. Unfortunately, the PBGC refused US Airways’ deferred “restoration funding†solution. Without the PBGC’s authorization for restoration funding, US Airways employees, on top of tremendous job losses and pay and work rule concessions, could now be stripped of nearly all of their pension benefit—a benefit they have spent decades working to earn and have included in their retirement planning.

In an industry that has weathered the worst of the impact of September 11, 2001, US Airways was affected the most:

· One of our domicile airports, Reagan National, was closed for nearly one month, costing US Airways millions of dollars in revenue at a fiscally critical time.

· US Airways’ restructuring has cost employees thousands of jobs, including the jobs of nearly 1,900 pilots.

· US Airways was the first major airline to file for bankruptcy after September 11, 2001.

· US Airways employees were forced to provide billions of dollars worth of concessions to win conditional approval for an ATSB loan that would be used upon emergence from bankruptcy.

· Recently, with the industry still depressed and the ATSB asking for further cost savings, US Airways’ employees authorized even more concessions.

US Airways employees have sacrificed a great deal to ensure that US Airways would survive and have already participated in two rounds of concessionary negotiations. During these negotiations, the pilots provided the Company with the bulk of the concessions that are needed to allow US Airways to receive approval for the ATSB loan. Until our pension issue is solved, however, the ATSB will not provide the $1 billion loan guarantee for which US Airways applied and already received unanimous conditional approval in the summer.

Although our pension benefits are insured by the PBGC, that is little consolation to our pilots, many of whom have spent their entire flying career at US Airways. The PBGC can only pay a limited amount of monthly benefits to workers whose plans have ended, and this shortfall is compounded when you consider that pilots must retire by age 60, further restricting supplemental benefits.

US Airways and ALPA have asked the PBGC to grant a waiver on pension funding requirements that would allow US Airways to defer its payments and spread them out over a 30-year period. This restoration funding would allow our retiring pilots, and other employees, to keep their hard-earned pensions and avoid the termination of our pension funds.

US Airways is not the only company that is having pension difficulties. Growing pension obligations may cause other companies to take similar steps. The precedent the government needs to set is to allow industries, companies and employees to help themselves get through a difficult period and enable responsible solutions that avoid unnecessary harm to retiring American workers.

ALPA is honored to have received support from U.S. Senator Specter, U.S. Senator Santorum and many other legislators on this very important pension issue. ALPA and the US Airways pilots are respectfully requesting that the government step in and clarify the PBGC’s authority to grant deferred funding payment relief. We are asking the PBGC to reconsider its decision and to recognize its authority to allow the restoration funding payment schedule so that the pilot and employee pension funds may survive.