2000flyer
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US Airways targets pilots' pension plan
By Barbara De Lollis, USA TODAY
ALEXANDRIA, Va. — With 10 months left in a 32-year flying career, US Airways Capt. Joe Graham suddenly faces a retirement shock.
Instead of the $175,000-a-year pension he'd counted on, Graham now thinks it could be $90,000, if he's lucky. Or even much less.
Graham is one of 5,700 US Airways pilots whose retirements may be crushed in the vise of their employer's bigger money troubles. US Airways is asking a federal bankruptcy judge to terminate the pilots' pension plan, freeing the company from about $1.7 billion in pension obligations and possibly clearing the way for its emergence from reorganization in late March. A three-day court hearing on the US Airways' motion is expected to conclude today in bankruptcy court here.
If the plan is terminated, pilots would receive up to $28,400 a year from the Pension Benefit Guaranty Corp., which insures business pension plans. US Airways also has offered to contribute $850 million to a new scaled-down plan that would pay additional benefits but less than the current plan offers.
While terminating the plan could save thousands of jobs at US Airways, it would be a staggering blow for veteran pilots like Graham. He has three children to put through college, and when he turns 60 in December, he'll hit the mandatory retirement age for airline pilots. The prospect of losing most of his pension comes on top of pay cuts that he says have cut his salary 30% from $275,000 a year. He is one of US Airways' most senior pilots.
"You can rationalize these pay cuts. You can cut your lifestyle back, you can not get a new car, you can cut back on your travel," he says. "But, by God, they're not going to turn me loose at 60 unable to fly at $28,000 a year with three kids."
Today in bankruptcy court, US Airways will argue that its survival rests on terminating the pension plan. If it doesn't emerge from Chapter 11 next month, it could lose more than $1 billion in financing and a critical deal for processing its credit card sales, which accounts for half its revenue.
"If we don't resolve this issue, there will not be a company," says Jack Butler, US Airways' bankruptcy lawyer.
In a sign of how emotionally charged the issue is, more than 100 pilots — most in uniform — have packed the bankruptcy courtroom and an overflow room to watch the hearing.
US Airways says it got to this point in part because the weak stock market and low interest rates devalued the current fund's investments and left it unable to meet obligations.
The situation is still tough. US Airways Chief Financial Officer Neal Cohen testified this week that the airline is losing $2 million a day, and a war could cost it millions more. To afford payments to the pension plan, Cohen said, the company would need to save $600 million elsewhere over the next three years, which he doesn't believe is possible.
The airline tried to find ways to get around the payments, such as stretching them over 30 years instead of seven. But it couldn't get authority from the PBGC or Congress to do so.
The Air Line Pilots Association is expected to mount its challenge today. The union contends that US Airways hasn't explored every alternative, such as trimming the $3 billion to $4 billion that the company expects to spend on regional jets over several years. ALPA also says US Airways' motion raises contract issues that should be settled under labor laws, not bankruptcy laws.
Meanwhile, the issue is stirring distrust among the pilots. Many believe the company is using the savings from their pension to offset contributions to other pension plans, including management's. US Airways denies that.
Pilots were stung by Cohen's testimony Monday that the airline paid $35 million in advance pension payments to former chairman Stephen Wolf, former CEO Rakesh Gangwal and former general counsel Lawrence Nagin before its Chapter 11 filing in August.
Charlie Couch, 58, has been flying for US Airways for 16 years. He says termination could cost half his pension payments. He thinks other aviation jobs will be hard to find because many pilots have been furloughed since the Sept. 11 attacks, 1,800 at US Airways. He and his wife are considering selling their dream house in Chester County, Pa.
"It still feels surreal," he says. "You do your flying. Everything looks normal. Then you realize it's a nightmare."
======================
US Airways targets pilots' pension plan
By Barbara De Lollis, USA TODAY
ALEXANDRIA, Va. — With 10 months left in a 32-year flying career, US Airways Capt. Joe Graham suddenly faces a retirement shock.
Instead of the $175,000-a-year pension he'd counted on, Graham now thinks it could be $90,000, if he's lucky. Or even much less.
Graham is one of 5,700 US Airways pilots whose retirements may be crushed in the vise of their employer's bigger money troubles. US Airways is asking a federal bankruptcy judge to terminate the pilots' pension plan, freeing the company from about $1.7 billion in pension obligations and possibly clearing the way for its emergence from reorganization in late March. A three-day court hearing on the US Airways' motion is expected to conclude today in bankruptcy court here.
If the plan is terminated, pilots would receive up to $28,400 a year from the Pension Benefit Guaranty Corp., which insures business pension plans. US Airways also has offered to contribute $850 million to a new scaled-down plan that would pay additional benefits but less than the current plan offers.
While terminating the plan could save thousands of jobs at US Airways, it would be a staggering blow for veteran pilots like Graham. He has three children to put through college, and when he turns 60 in December, he'll hit the mandatory retirement age for airline pilots. The prospect of losing most of his pension comes on top of pay cuts that he says have cut his salary 30% from $275,000 a year. He is one of US Airways' most senior pilots.
"You can rationalize these pay cuts. You can cut your lifestyle back, you can not get a new car, you can cut back on your travel," he says. "But, by God, they're not going to turn me loose at 60 unable to fly at $28,000 a year with three kids."
Today in bankruptcy court, US Airways will argue that its survival rests on terminating the pension plan. If it doesn't emerge from Chapter 11 next month, it could lose more than $1 billion in financing and a critical deal for processing its credit card sales, which accounts for half its revenue.
"If we don't resolve this issue, there will not be a company," says Jack Butler, US Airways' bankruptcy lawyer.
In a sign of how emotionally charged the issue is, more than 100 pilots — most in uniform — have packed the bankruptcy courtroom and an overflow room to watch the hearing.
US Airways says it got to this point in part because the weak stock market and low interest rates devalued the current fund's investments and left it unable to meet obligations.
The situation is still tough. US Airways Chief Financial Officer Neal Cohen testified this week that the airline is losing $2 million a day, and a war could cost it millions more. To afford payments to the pension plan, Cohen said, the company would need to save $600 million elsewhere over the next three years, which he doesn't believe is possible.
The airline tried to find ways to get around the payments, such as stretching them over 30 years instead of seven. But it couldn't get authority from the PBGC or Congress to do so.
The Air Line Pilots Association is expected to mount its challenge today. The union contends that US Airways hasn't explored every alternative, such as trimming the $3 billion to $4 billion that the company expects to spend on regional jets over several years. ALPA also says US Airways' motion raises contract issues that should be settled under labor laws, not bankruptcy laws.
Meanwhile, the issue is stirring distrust among the pilots. Many believe the company is using the savings from their pension to offset contributions to other pension plans, including management's. US Airways denies that.
Pilots were stung by Cohen's testimony Monday that the airline paid $35 million in advance pension payments to former chairman Stephen Wolf, former CEO Rakesh Gangwal and former general counsel Lawrence Nagin before its Chapter 11 filing in August.
Charlie Couch, 58, has been flying for US Airways for 16 years. He says termination could cost half his pension payments. He thinks other aviation jobs will be hard to find because many pilots have been furloughed since the Sept. 11 attacks, 1,800 at US Airways. He and his wife are considering selling their dream house in Chester County, Pa.
"It still feels surreal," he says. "You do your flying. Everything looks normal. Then you realize it's a nightmare."
