C
chipmunn
Guest
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.
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.
