US Airways and the Air Line Pilots Association (ALPA) have reached an agreement on a replacement pension plan that has been ratified by the ALPA Master Executive Council at the airline and now awaits approval by the Pension Benefit Guaranty Corp. (PBGC).
The agreement follows a final round of intense negotiations in which both airline and union leadership committed to finding a solution to a critical hurdle that would allow US Airways to emerge from Chapter 11. The U.S. Bankruptcy Court had issued a decision on March 1, 2003, which found that US Airways had met the standards and conditions for a distress termination of the existing defined benefit pension plan and authorized the company to implement a defined contribution plan. Following the court`s confirmation of US Airways` plan of reorganization on March 18, 2003, the resolution of the pension issue was one of the few remaining issues that needed to be completed.
“We are 10 days away from completing our Chapter 11 reorganization and the choices are rather stark: successfully complete the process and emerge from bankruptcy protection, or fail. The management of the airline did not undertake this difficult process to fail, and neither did our pilots,” said David Siegel, US Airways president and chief executive officer. “I respect ALPA`s leadership in working to shape a replacement plan that addresses concerns of its members. Our pilots have made enormous sacrifices and led all other employee groups through this restructuring. With the airline business only getting worse as the Iraqi War heightens public anxiety, it is critical that we complete our reorganization, exit from Chapter 11, and secure the $1.24 billion in new financing that awaits us.”
Terms of the agreement have not been disclosed, pending review by the PBGC, which must approve the replacement pension plan and final Bankruptcy Court approval to complete the process of terminating the existing pension plan by March 31, 2003.