US Airways today said
it will ask the Internal Revenue Service (IRS) for authority, as permitted
under IRS rules, to reschedule contributions to the defined benefit
pension plans for the Association of Flight Attendants (AFA) and the
International Association of Machinists (IAM), representing mechanical and
related employees. “Rescheduling these payments will help US Airways to conserve its cash so
that we have sufficient liquidity to operate the airline,” said Jerry
Glass, US Airways senior vice president of Employee Relations. “This is an
important step as we work to ensure our survival and future prosperity.”
A letter has been sent to employees in both work groups explaining the
company’s action. The two plans would be treated the same under the
proposed payment rescheduling.
Under IRS rules, US Airways is required to make contributions of
approximately $67.5 million total to the AFA and IAM plans for the 2004
plan year. If the application for a waiver is approved, the company will
be able to spread out these contributions for the 2004 plan year for up to
five years, rather than the 18 months during which the contributions
otherwise would have been made.
Because US Airways already has contributed $28.6 million to the AFA and
IAM plans during 2004, the company intends to apply that amount toward the
last 2003 plan year payment, which is due on Sept. 15.
The proposed payment rescheduling would have no impact on retirees. For
current employees, pension benefits will still begin when an employee
retires and continue throughout the employee’s lifetime.