US Airways Poised to End Bankruptcy ( )
ALEXANDRIA, Va., Mar 28, 2003 (AP Online via COMTEX) -- A federal judge on Friday gave his final approval to US Airways'' termination of its pilots'' pension plan, clearing the way for the airline to emerge from bankruptcy protection next week.
The pension issue had been the last hurdle to the airline emergence. On Friday morning, the Federal Pension Benefit Guarantee Corp. gave its approval to the pension plan, and U.S. Bankruptcy Judge Stephen Mitchell approved it Friday afternoon.
Airline spokesman Chris Chiames said the airline will work through the weekend to clear up technical matters so that it can emerge from bankruptcy protection on Monday.
Think of it as a huge closing on a house. The weekend is going to be spent executing literally hundreds of transactions, Chiames said.
If all goes well, Chiames said, the airline will receive a $900 million federally guaranteed loan and a $240 million investment from the Retirement Systems of Alabama on Monday. That financing was only available to the airline upon emergence from bankruptcy.
The RSA is receiving a 38 percent share of the airline and a controlling interest on the board of directors in return for its investment.
US Airways, the nation''s seventh-largest carrier, filed for bankruptcy in August, nearly a year after the Sept. 11 attacks sent the airline industry, particularly US Airways, into a tailspin.
The airline has shed a third of its capacity and a third of its pre-Sept. 11 workforce of 46,000 employees, and cut its costs while in bankruptcy by $1.9 billion a year.
The final cost cut came by terminating the pilots'' pension plan. That plan will now be taken over by the PBGC, and US Airways will replace the old plan with a smaller plan.
The PBGC will now take over the old plan and pay out reduced benefits to the pilots. Those benefits will be supplemented by the company''s new plan.
The PBGC''s review concluded that the combined benefits pilots will receive are not as good as what they would have received under the old plan. If they had been equivalent, the PBGC would have rejected the plan as an abuse of the PBGC''s role as a pension insurer.
US Airways will save an estimated $600 million over the next seven years under the new pension plan.
The airline and pilots agreed on the new plan last weekend, and the PBGC began its review on Monday.
We appreciate the efforts of the PBGC to respond quickly and favorably in its review, said US Airways President and Chief Executive David N. Siegel. We have impressed upon the agency''s staff our efforts to work cooperatively with (the pilots'' union), given the leadership and sacrifices we have seen from our pilots.
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