US Airways'' fate rests in arbitrator''s hands

C

chipmunn

Guest
US Airways'' fate rests in arbitrator''s hands
PITTSBURGH (Tribune-Review) - A bankruptcy judge''s conditional approval for US Airways to terminate its pilots pension plan leaves much of the airline''s prospects for recovery in the hands of a labor arbitrator, analysts said Monday.
It also means US Airways'' creditors will have to vote for or against the carrier''s reorganization plan before knowing a key factor: Whether the cash-strapped airline can shed $2 billion in pension liabilities over the next seven years.
Creditors will have to vote on something without knowing the full story, said Michael Boyd, head of the Boyd Group, an airline consultancy based in Evergreen, Colo.
The federal judge hearing US Airways'' bankruptcy case on Saturday night granted the airline''s request to terminate the plan, as long as a yet-to-be-chosen arbitrator determines that doing so would not violate the collective-bargaining agreement with the pilots.
The mixed ruling really didn''t surprise me, Boyd said. The judge realizes the airline has to go forward, but he also knows that the airline and the pilots have to like each other in order for it to go forward.
U.S. Bankruptcy Judge Stephen Mitchell''s ruling in the Alexandria, Va., court also left hanging the Pension Benefit Guaranty Corp. The agency, which insures retirement plans, had been waiting for Mitchell''s ruling before deciding whether to grant US Airways'' request to take over the pilots pension plan.
An arbitrator is supposed to hear the matter on March 13.
We won''t be taking any steps until the resolution of the collective-bargaining dispute by the arbitrator, Gary Pastorius, spokesman for the Pension Benefit Guaranty Corp., said yesterday.
On Jan. 30, US Airways filed for a distress termination of the plan. That means the pension agency would take over the pilots plan, which covers nearly 8,000 pilots, retirees and other beneficiaries.
But the Pension Benefit Guaranty Corp., by statutory limit, would pay out no more than $28,585 annually to a pilot retiring this year at the mandatory age of 60, Pastorius said. Retiring at 65, a pilot would get an annual pension of $43,977.
The amounts compare with pilot retirement benefits that usually range between $50,000 and $70,000, the Air Line Pilots Association said.
There is pain here, Boyd said of the slashed retirement benefits. But this pain is better than going completely out of business.
The analyst called Judge Mitchell''s ruling a victory for the airline, but only provided the arbitrator recognizes his ruling could cause the airline to go out of business.
In place of the defined benefit plan, US Airways wants to create a defined contribution plan. The airline has drafted the latter, which would cost $850 million over seven years, instead of the current $2 billion.
The details of the proposed plan are supposed to be negotiated between the pilots union and US Airways management.
US Airways declined comment yesterday about the pending negotiations, as well as the arbitrator''s proceedings.
In testimony Saturday, CEO David Siegel reiterated management''s position that without terminating the pilot pension, it would be forced to liquidate — instead of reorganize — the airline.
Only by resolving the pension issue, he said, can US Airways obtain a much-needed, $900 million loan guaranty from the government and $440 million in credit and equity capital from the Retirement Systems of Alabama, which is funding the airline while in bankruptcy.
Separately yesterday, US Airways said general counsel and executive vice president Michelle Bryan would resign shortly after the company exits bankruptcy, which it hopes will occur before April 1. She would be replaced by Elizabeth Lanier, who had held a similar position with Trizec Properties Inc.
 

DCAflyer

Veteran
Aug 27, 2002
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Tribune-Review reported:

But the Pension Benefit Guaranty Corp., by statutory limit, would pay out no more than $28,585 annually to a pilot retiring this year at the mandatory age of 60, Pastorius said. Retiring at 65, a pilot would get an annual pension of $43,977.

DCAflyer asks:

Chip, I thought pilots were required to retire by their 60th birthday. Why give the age 60 figure?


Trib-Review also reported:

Separately yesterday, US Airways said general counsel and executive vice president Michelle Bryan would resign shortly after the company exits bankruptcy, which it hopes will occur before April 1. She would be replaced by Elizabeth Lanier, who had held a similar position with Trizec Properties Inc.

DCAflyer sings:

Ding Dong, the wicked witch is dead!
 

Diesel8

Senior
Aug 19, 2002
290
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www.usaviation.com
Raising the retirement age will hopefully not be pursued as a solution. Once again, it would be the Pilot community eating their young, preventing people from getting recalled. As arbitrary as the age 60 rule is, that is the rule we play by.

Of course, raising the retirement age in general, seem to be the way poiticians are trying to fix the SS system.

Maybe we can all work untill we drop, that would certainly solve a lot of problems.
 

ual06

Senior
Aug 30, 2002
331
0
A number of years ago, there was a rumor that age 65 retire for pilots was written and laying on a desk in Washington for signature. The hold-up was how to handle the lawsuits, back pay, increased retirement benefits, etc. of those pilots who had been forced out at 60 ??
 

oldiebutgoody

Veteran
Aug 23, 2002
2,627
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www.usaviation.com
[blockquote]
----------------
On 3/4/2003 9:59:59 AM ual06 wrote:

A number of years ago, there was a rumor that age 65 retire for pilots was written and laying on a desk in Washington for signature. The hold-up was how to handle the lawsuits, back pay, increased retirement benefits, etc. of those pilots who had been forced out at 60 ??
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[/blockquote]
That doesn't even make sense. You can't sue the government (unless they let you, it's called "immenent domain") and even if the law changed most carriers would need new contracts to put it into place. Even if the law were passed, many pilots would STILL be forced to retire until new collective bargaining agreements were in place, and these could factor in the "recalls" and training issues. I think what you heard comes under the title "urban legend". I don't doubt for a second that it's being considered, but the reasons you state would NOT prevent it from being instituted.
 

usfliboi

Veteran
Aug 20, 2002
2,070
270
Soooo dramatic............ and false.....its so simple..... i mean use your common sense lol the plan will be terminated no doubts period. If there isnt a n agreement no company to negotiate a plan with ... its just that simple.... no hard ball here to play .... alpa knows their place and limits and i assure u will not cross it....
 

jjdoe

Newbie
Nov 30, 2002
14
0
I don't know much about this issue except that the mandatory age for commercial pilots to retire is 60. There is and has been a movement afoot for some time to change that. This link provides some background info about the issue http://www.apaas.org/. If the link doesn't work just cut and paste it.
 

2cents

Member
Dec 17, 2002
26
0
www.usaviation.com
[blockquote]
----------------
On 3/4/2003 11:19:26 AM usfliboi wrote:

Soooo dramatic............ and false.....its so simple..... i mean use your common sense lol the plan will be terminated no doubts period. If there isnt a n agreement no company to negotiate a plan with ... its just that simple.... no hard ball here to play .... alpa knows their place and limits and i assure u will not cross it....
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[/blockquote]
Exactly....thanks for the rational "big picture" Stewart
 

PHL

Veteran
Aug 20, 2002
1,658
57
[blockquote]
I don't know much about this issue except that the mandatory age for commercial pilots to retire is 60. There is and has been a movement afoot for some time to change that. This link provides some background info about the issue http://www.apaas.org/. If the link doesn't work just cut and paste it.
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[/blockquote]
That rule is not for FAA Commerically Rated pilots. Or even ATP rated pilots, for that matter. It's for pilots employed by Air Carriers. Many retired airline pilots maintain their ATP certification and instruct, fly charters, etc. for "Commercial Operators", which are not the same as airlines. The big push to get that age increased seems to have lost momentum in recent years as the economy has slowed to a virtual halt.
 

jjdoe

Newbie
Nov 30, 2002
14
0
True. I wasn't specific enough in my post but on this board I thought the issue that was being addressed was the mandatory retirement of FAA Commercial Airline Pilots i.e. those here at USAIRWAYS. Flying past 60 under the circumstances you mention is a different issue but you are correct, it certainly is allowed.
 

Cfm56

Member
Nov 3, 2002
91
0
Interesting post on an AOL message board:


As a pilot with an airline with a defined contribution plan (generously matched 401K) I warned my friends at other airlines with defined benefit plans. My 401K is my money no matter if the company goes Ch. 11 or 7, while, as some are learning, the traditional pension plans are "owned" by the company and 'things' can happen with it. Additionaly my 401K money can be enherited by heirs when I die, unlike a defined benefit plan. Sure, the defined benefit plans have some advantages, but as Braniff, EAL, Pan Am, found out and UAL and U pilots are finding out, some very big minuses. I remember when debating all this with a UAL pilot a several years ago, he said "...there was certainly nothing for HIM to worry about as UAL has a different future than EAL" and he sorta laughed at my points. Wonder if he's still laughing?
 

1ab

Advanced
Aug 21, 2002
147
0
But Alas i say why let it rest with an arbitrator who have no stake in the company.
I remember Dave mentioning that this pension would be the biggest problem from his first road show ..and he repeated it at his second road show..Seems like you pilots were wearing blinders and ear muffs all this time.
Yeh its unfortunate that you pilots loosing you pension or you won't get what you thought you would get but thats what life is all about...adapting to situations that comes your ways.
Seems to me this should be settled internally by Pilots and Management coming together to renegoitiate a new pension plan.
If the arbitrator rules in your favor what do you do next??
and likewise what if it goes the other way..
Its March ...there is a war coming and U is very vulnerable...time is at the essence.
 

ZMAN777

Advanced
Aug 23, 2002
204
0
www.usaviation.com
[blockquote]
----------------
On 3/6/2003 2:12:19 PM Cfm56 wrote:

Interesting post on an AOL message board:


As a pilot with an airline with a defined contribution plan (generously matched 401K) I warned my friends at other airlines with defined benefit plans. My 401K is my money no matter if the company goes Ch. 11 or 7, while, as some are learning, the traditional pension plans are "owned" by the company and 'things' can happen with it. Additionaly my 401K money can be enherited by heirs when I die, unlike a defined benefit plan. Sure, the defined benefit plans have some advantages, but as Braniff, EAL, Pan Am, found out and UAL and U pilots are finding out, some very big minuses. I remember when debating all this with a UAL pilot a several years ago, he said "...there was certainly nothing for HIM to worry about as UAL has a different future than EAL" and he sorta laughed at my points. Wonder if he's still laughing?
----------------
[/blockquote]

CFM56,

I understand where you're coming from but just to set the record straight, UAL pilots ALSO enjoy the benefit of their so called "B Fund". Which is separate from that of the defined benefit plan ("A Fund"). Needless to say, this "B Fund" at UAL will most likely no longer be funded at the level it has been (11% by the Company PRIOR to individual contributions), it is still the individual pilot's regardless of what happens to the Company and their respective "A Fund".

Cheers,
Z
 

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