US Airways Says It Must Cut Pilot Pensions

LavMan

Veteran
Feb 12, 2003
826
0
By John Crawley
WASHINGTON (Reuters) - US Airways Group Inc. (OTC BB:UAWGQ.OB - News) said on Friday that active and retired pilots will never get all the pension benefits they''re owed and told a bankruptcy court judge that dramatically scaling back retirement benefits is crucial to the company''s survival.
These benefits will never be paid at these levels. They are gone, US Airways bankruptcy lawyer John Butler said at a hearing on the airline''s proposal to terminate the pilots'' pension plan and replace it with a cheaper one.
US Airways faces a $2 billion shortfall in the current pilot retirement program.
Butler told bankruptcy court judge Stephen Mitchell that unresolved pension liabilities have blocked the airline''s access to $200 million in emergency financing.
US Airways said late on Thursday it had defaulted on a $19.7 million payment on five planes purchased from European aircraft maker Airbus.
The airline also has to resolve the pension issue before it can get final approval for a $1 billion government-backed loan that is the cornerstone of its plans to reorganize.
US Airways, which hopes to emerge from bankruptcy at the end of March, needs court approval of its plan to replace the pilots'' pension plan.
The union representing 4,000 U.S. Airways pilots, the Air Line Pilots Association (News - Websites), opposes the plan to terminate the existing benefits.
The union has challenged the company''s assertion that it can terminate the plan without ALPA''s consent. It contends that the issue must be resolved through collective bargaining rather than the courts and has asked Mitchell to deny the proposal.
U.S. Airways pilots have already agreed to annual pay work rule and retirement concessions totaling $646 million, said senior union official Capt. Bill Pollock.
By asking the court to approve termination of the plan, Pollock said, U.S. Airways is attempting to force pilots to bear an unacceptable and unjust burden.
Some pilots would suffer a reduction in their retirement income of as much as 75 percent, the union says. Currently there are 1,100 U.S. Airways pilots who are retired and receiving benefits averaging about $36,000 a year.
The plan has to be approved by the court and by the U.S. Pension Benefit Guarantee Corp., a quasi-government entity that oversees pensions.
The agency and Congress have rejected a company proposal to solve the pension problem by stretching out payments into the system over 30 years. The union still hopes lawmakers will change their minds and allow the airline to modify the existing pension plan.
 

Dea Certe

Veteran
Aug 20, 2002
889
0
What worries me, beyond the immediate possible liquidation of US Airways and the loss of my job, is that if US Airways can get away with this, what's to stop the rest of corporate America from jumping on the band wagon? Every worker in any industry could face severely reduced pensions after putting in their time in good faith. What a wonderful thing this would be for all the greedy companies out there. A new all-time low set for corporate ethics.

With all the baby boomers on the verge of retirement can you imagine the effect this will have on our nation's economy?

I don't see this as only ALPA's fight. ALPA is just the first. This is every workers fight for their own future. If ALPA loses, we all do; airline employee or not.

What a sorry state of affairs has come to pass.
 

PITbull

Veteran
Dec 29, 2002
7,784
456
www.usaviation.com
[blockquote]
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On 2/21/2003 6:56:44 PM Dea Certe wrote:

What worries me, beyond the immediate possible liquidation of US Airways and the loss of my job, is that if US Airways can get away with this, what's to stop the rest of corporate America from jumping on the band wagon? Every worker in any industry could face severely reduced pensions after putting in their time in good faith. What a wonderful thing this would be for all the greedy companies out there. A new all-time low set for corporate ethics.

With all the baby boomers on the verge of retirement can you imagine the effect this will have on our nation's economy?

I don't see this as only ALPA's fight. ALPA is just the first. This is every workers fight for their own future. If ALPA loses, we all do; airline employee or not.

What a sorry state of affairs has come to pass.
----------------
[/blockquote]

As labor, that is where our focus should be.

[img src='http://www.usaviation.com/idealbb/images/smilies/5.gif']