US Airways expects to overcome the pension issue



US Airways needs more help from unions

PITTSBURGH (Tribune Review) - The man with the millions to rescue bankrupt US Airways said Tuesday said efforts to save the airline could be scuttled if the airline's management and labor unions can't quickly resolve a $1.1 billion funding gap in the company's pension plan.

David Bronner, chief executive of the Retirement Systems of Alabama, which has pledged to invest $240 million for a 36.6 percent stake of US Airways to help it emerge from Chapter 11, said yesterday that failure to resolve the pension issue would jeopardize the airline's application for a $950 million loan guaranty.

The guaranty is needed for the airline to obtain $1 billion in loans, which together with the Alabama fund's investment, and the $300 million it has already provided in interim financing, are the financial pillars for the airline's survival.

The airline had proposed reducing the amount it would fund its pension plan from $3.1 billion to $2 billion over the next seven years. The Pension Benefit Guaranty Corp., a federal agency that insures pension plans, told the Tribune-Review last week that it rejected this proposal.

"It's right back to management and the unions to do something to make the PBGC happy. It's critical to get to this last step," Bronner said yesterday.

Although he said employees have already "gone over the wall" in re-negotiating contracts in order to come up with more than $1 billion in wage and work rule concessions, he said they've got to go one final mile on the pensions to get the deal done.

"If we don't get the government approval on the pensions, all this work has been for naught," he said. "There has to be some middle ground for the management and unions to see what they can do to improve the pension situation to qualify for the loans."

US Airways recognizes the pension issue as one of the critical issues to resolve in order to successfully exit bankruptcy, but won't say what measures it is mulling.

"We've met every challenge so far in this process, and we're committed to resolving the pension liability issue. We're not in a position, however, to publicly discuss our options," said airline spokesman David Castelveter yesterday.

Bronner's warning comes on the heels of a similar warning from Sen. Arlen Specter, who wrote last week to the pension agency urging it to permit the airline to amend its pension plan.

Specter said the airline could be forced into liquidation if the pension gap isn't closed.

The airline filed a bankruptcy reorganization plan last Friday, and is awaiting a Jan. 16 hearing in bankruptcy court.


[v]US Airways expects to overcome the pension issue[/b]
PITTSBURGH (Beaver County Times) - The federal Pension Benefit Guaranty Corp. cannot give the go-ahead to US Airways'' plan for digging its employee pension plan out of a $3.1 billion shortfall, a spokesman for the federal agency said Monday.
It is not within our legal power to do what they want to do, the PBGC''s Jeffrey Spicher said.
At issue is US Airways'' request to terminate the plan, then restart it at a different funding level.
The law doesn''t allow that, Spicher said.
Bankrupt US Airways had proposed to put $2 billion into the pension fund over the next seven years, with the balance to be paid in installments.
US Airways certainly must resolve the pension issue before it can emerge from Chapter 11 bankruptcy protection as planned in March. But the PBGC''s failure to approve the plan isn''t the immediate catastrophe predicted by U.S. Sen. Arlen Specter, R-Philadelphia, in a news release last week.
Specter had said the airline could liquidate if the pension proposal didn''t get PBGC approval by Friday.
But the deadline really depends on when the federal Air Transportation Safety Board decides to give final approval on a $1 billion loan to US Airways. That could happen anytime between now and the company''s emergence from bankruptcy, sources said.
U.S. Bankruptcy Court will review US Airways'' plan on Jan. 16, and if approved, it will go to the airline''s creditors for a vote by the end of March.
US Airways spokesman David Castelveter would say only that the airline expects to overcome the pension issue, just as it has all other issues standing in the way of a successful restart.
The airline will not otherwise discuss its plans for the pension fund.
In its restructuring plan, US Airways said it expects to lose $229 million in 2003, followed by a profit of $122 million in 2004, rising gradually to a $269 million profit in 2009.
The airline projects its revenue will rise from $5.7 billion in 2003 to $7.9 billion in 2009.
It considers the advent of low-cost carriers to be a threat, but one that will be offset by the increased use of regional jets by US Airways, and its code-sharing agreement with United Airlines.
[BLOCKQUOTE][BR]----------------[BR]On 12/25/2002 10:37:28 AM A320 Driver wrote: [BR][BR]He just can't seem to be quiet can he? [BR][BR]----------------[/BLOCKQUOTE][BR]
[P align=left][FONT size=1][/FONT][FONT size=1] Even Scrooge took a day off.Good Luck and Merry Christmas to you guys.[/FONT][/P]

A320 Driver

Aug 24, 2002
He just can't seem to be quiet can he?

AP Tech

Sep 4, 2002
If history repeats itself it will be about 60 days after we ratify the latest round of givebacks. Then the company will give us the chance to fund the pensions..or else!! That is of course we can get the first vote correct.


Aug 28, 2002
I wonder just how tight you can stretch this rubber band anyway?


Look close, it's already tearing......