US Airways Pilots to Challenge Carrier''s Pension Change

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chipmunn

Guest
US Airways Pilots to Challenge Carrier's Pension Change
ST. LOUIS (Dow Jones) - The union representing pilots at US Airways Group Inc. plans to challenge the carrier's plan to terminate the pilots' defined benefit pension plan.
Earlier Thursday the Arlington, Va., carrier filed a notice with the Pension Benefit Guaranty Corp., which regulates pension plan terminations, that it plans to terminate the existing defined benefit pension plan for its pilots effective March 31.
The nation's seventh-largest carrier said in a press release Thursday that it expects to replace the more traditional plan with a defined contribution plan with yearly pilot contributions of $850 million for more than 3,700 pilots during the next seven years.
We are angered by the company's shifting of the funding that was supposed to go into our plan being transferred into the plans of other [US Airways] employees, said Roy Freundlich, a spokesman for the US Airways Master Executive Council of Air Line Pilots Association. We find that, plus the desire to terminate our plan completely unacceptable, and we will be challenging it on all fronts.
Airline consultant Michael Boyd, president of the Boyd Group in Evergreen, Colo., said US Airways may have concluded it had no choice but to file to terminate the pension plan.
It's unfortunate, he said. I can see why the pilots would be upset. But if the airline is gone, there won't be any retirement at all.
The pilots can file a lawsuit to try and stop US Airways from implementing the plant, Mr. Boyd said. But the two sides are going to have to find a happy medium at some point, he said.
If the pilot's union decides not to challenge the notice, it's going to have to accept an IOU that the carrier's reorganization plan is going to be successful, and that a new retirement plan would be the economic equivalent of what the payout is under the existing plan, said Robert Mann, an airline analyst and consultant at R.W. Mann & Co. in Port Washington, N.Y.
US Airways faces daily cash flow hurdles and the carrier may not see being able to clear those hurdles if they have to fund the pilots' pension plan at levels currently required by statute, Mann said.
If the carrier gets its way, it's likely that there will be fewer options under a new plan, Mann said. For example, the ability for a pilot to take a large lump sum benefit will likely be replaced with an annuity option, he said. An annuity is much easier on cash flow, Mann said.
A large number of US Airways pilots are at a senior level and so the expected retirement rate at the carrier is likely larger than at other carriers, Mann said. Given that many of them would likely take a lump sum benefit, that would drain the carrier's cash flow, he said.
It's likely that other carriers will face this same pension problem, although not likely to the extent that US Airways has, Mann said. Still, Mann said the carrier's move will likely have an effect on what happens at UAL Corp., the parent of Chicago-based United Airlines, which is also in poor financial shape.
 

savyinvestor

Senior
Jan 15, 2003
494
0
www.usaviation.com
"If the airline is gone there won't be any pension at all" appears to be the key phrase. Is that so hard to understand? The company wants to put ANOTHER plan in place of the terminated plan with equal benefits. Seems pretty clear to the average person IMHO. Savy
 

nvrsaynvr

Member
Aug 20, 2002
21
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average or not -- someone please explain exactly what money is being used to fund other pensions? If there is any money ... will it not go to fund the pilots 'new' pension.., assuming it actually transpires. I do not understand how the pilots are paying our pension? If it is givebacks, could we be paying for our own pensions? And who is paying for the other 'underfunded' projects? There seems to be a lack of money to pay everything.., a couple of million here and there is not going to make the difference, but a billion or two might. Who has access to the books to know just exactly what the he_l is happening?
 
OP
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BottomFeeder

Guest
[blockquote]
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On 1/30/2003 9:20:10 PM savyinvestor wrote:

"If the airline is gone there won't be any pension at all" appears to be the key phrase. Is that so hard to understand? The company wants to put ANOTHER plan in place of the terminated plan with equal benefits. Seems pretty clear to the average person IMHO. Savy
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[/blockquote]

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Savy,

You hit the key word "EQUAL". They (Old compared to New)are not "EQUAL". Dave says "APPROPRIATE" and that is the the sticky point.


What kind of a leader would you follow?
 

PITbull

Veteran
Dec 29, 2002
7,784
456
www.usaviation.com
[blockquote]
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On 1/30/2003 10:55:13 PM nvrsaynvr wrote:



average or not -- someone please explain exactly what money is being used to fund other pensions? If there is any money ... will it not go to fund the pilots 'new' pension.., assuming it actually transpires. I do not understand how the pilots are paying our pension? If it is givebacks, could we be paying for our own pensions? And who is paying for the other 'underfunded' projects? There seems to be a lack of money to pay everything.., a couple of million here and there is not going to make the difference, but a billion or two might. Who has access to the books to know just exactly what the he_l is happening?


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[/blockquote]

Siegel has repeatedly said that the employees will have to pay for thier own pensions if they insist they want to maintain a "defined pension" (speech he gave on Septemeber 17 in DCA at the International Aviation Club in front of other carriers' CEO collegues), also ALPA International President present along with AFA INternational President present.