Schofield''s pension to be reduced!

us10

Advanced
Sep 11, 2002
138
0
ALEXANDRIA, Va. - Objections to US Airways'' reorganization plan came from all levels Thursday, from a Weirton, W.Va, mechanic who had his retirement fund wiped out to a group of 12 former executives, including former CEO Seth Schofield, who had their supplemental pension plan terminated.
But a bankruptcy judge turned their objections aside, at least for now, and the airline remained on track to emerge from bankruptcy protection by the end of March, a mere seven months after filing for Chapter 11 protection in August.
The judge is expected to decide on Friday whether the airline''s reorganization plan can move forward. On Thursday, he dealt with numerous objections, including many from shareholders who will see their investments lost completely.
Ron Hirkala, 53, a mechanic who has worked with US Airways for 24 years at its Pittsburgh hangar, estimated that he has lost $75,000 to $80,000 out of his retirement fund because he was invested heavily in company stock.
I have no further retirement funds, and no trust in our company, Hirkala said.
But U.S. Bankruptcy Judge Stephen Mitchell said shareholders cannot be paid unless unsecured creditors collect their claims in full. And US Airways'' plan calls for unsecured creditors to be paid less than 2 cents on the dollar. Mitchell said he believes Congress should consider an exception to that rule for employees whose retirement plans are invested in company stock, but the law currently makes no such exception.
US Airways spokesman Chris Chiames said the company is sympathetic to the plight of employees like Hirkala, but he also said that US Airways employees were never required to hold company stock in their 401 (k) plans.
On the other end of the spectrum, the 12 former executives argued that they were being treated unfairly because the company is canceling a benefits plan that collectively paid annual benefits of about $840,000 a year. US Airways plan'' would reduce that amount to about $15,000 a year.
Philip Anker, a lawyer for the former executives, said the plan is unfair because current executives will continue to receive a healthy benefits plan.
Airline lawyer John W. Butler Jr. disputed that, saying chief executive David Siegel, for instance, has taken a pay cut of about 60 percent. Management as a whole will be given an 8 percent share in the reorganized company, a potentially lucrative amount, but Butler said that was necessary to retain a strong management team.
World-class management teams don''t work for free, Butler said. And world-class management, by its presence, creates value.
Butler also said it would be unseemly to pay former executives a big pension at a time when employees have collectively given back $1 billion a year in salaries and benefits to keep the company from shutting down entirely.
The airline, which has its largest hub in Charlotte, N.C., estimates in its reorganization plan that it will turn a profit of $127 million by fiscal 2004 and increase profits to $405 million by 2007. That is based on projections that revenue will increase from $7.2 billion in 2003 to $7.7 billion by 2007.
In 2001, a year marred by the travel industry''s slump after the Sept. 11 attacks, the company lost $2.1 billion on revenue of $8.3 billion. Since then, the company has laid off about 30 percent of its pre-Sept. 11 work force of 46,000 and cut back its schedule by a similar amount.
The plan filed Thursday does not address an unfunded pension liability of about $3 billion. The company is hoping congressional legislation will allow it some leeway. If not, the company will terminate the pension plan and it would be taken over by the federal Pension Benefit Guaranty Corp.
The PBGC would pay a maximum benefit amount of $28,000 a year, which is just a fraction of what some pilots would receive under their existing plan.
In a memo to pilots Thursday, Siegel said that even if the plan is terminated, the airline would implement a new plan for pilots, so they would receive the federal benefit and a new pension from the airline.
The other unions'' pension plans are not affected.
 

retiredman

Member
Dec 17, 2002
29
0
[blockquote]
----------------
On 1/17/2003 1:02:59 AM USAirUnited wrote:

Wonder how much we are still paying uncle Ed?
----------------
[/blockquote]

Amazing, I did not see anyone with their hands or pockets closed when money was available.
 

DCAflyer

Veteran
Aug 27, 2002
821
0
Wa-hooooo! What about Gangwall? Let's hope his is wiped out as well. What irks me is it looks like the Wolfman might get to keep his pension, since he is still on the property. Let's hope it's greatly reduced from what it would have been pre-C11.
 

sdavis29

Advanced
Nov 13, 2002
222
0
www.usaviation.com
[BR][BR]
[BLOCKQUOTE][BR]----------------[BR]On 1/17/2003 7:52:34 AM PineyBob wrote: [BR][BR]Why does it seem totally fair and appropriate that these pensions be greatly reduced? Is it my overactive sense of fair play? class envy? Emotional or rational?[BR][BR]Actually I think it is all of those things but more importantly it is prudent business! Both from a Labor Relations point of view and a hard dollars out of pocket view, this was one of the brighter moves made so far. I still am of the opinion that CCY is in for more pain in terms of cutbacks. [BR][BR]I posted on here awhile back that I think CCY and ALL of the HQ operations and support be moved to AL or someplace rural where everything is cheaper. Heck ole Dr. Bronner could find them space in a heartbeat for less than half of they pay now. They can use the money they saved on executive pensions to pay for the move. Now is the time to make a move because under BK I am near certain they can walk away from CCY. Think of what that move would do to all the mid level types who still bicker over the PSA, ALG or Piedmont way? you'd lose most and you could start over with fresh faces and fresh ideas.[BR][BR]Since I am new to this stuff just who is mr. Scholfield? where does he fit into all of this?----------------[/BLOCKQUOTE][BR][BR][A href="http://cf.alpa.org/internet/news/1996news/NR96002.htm"]http://cf.alpa.org/internet/news/1996news/NR96002.htm[/A][BR][BR][A href="http://www.sptimes.com/2002/05/16/Worldandnation/Years_later__US_Airwa.shtml"]http://www.sptimes.com/2002/05/16/Worldandnation/Years_later__US_Airwa.shtml[/A][BR]
 

Latest posts