The Honolulu Star-Bulletin reports that, although the PBGC had reached a tentative agreement with the airline in December, the nation’s pension insurer filed a motion before the hearing yesterday to oppose the confirmation of Aloha’s new restructuring plan, saying the airline had repeatedly sought modifications and additions to the agreement in principle.
The airline thought it had addressed all objections last week when it filed a motion for a hearing on its restructured proposal (See Airline Hopes to Bid Aloha to Bankruptcy), according to the report.
The new agreement with the PBGC calls for Aloha to keep a pension plan covering 28 employees in the Transport Workers Union but terminate three other pension plans covering the Air Line Pilots Association, the International Association of Machinists and Aerospace Workers, and nonunion employees. According to the Star-Bulletin, the pilots and machinists, who both had “me too” clauses in their new contracts that called for all the union pension plans to be treated the same, waived that provision to get the settlement approved.
In return, the PBGC agreed not to file any more appeals, and Aloha agreed to pay the agency $1.25 million to satisfy its administrative and priority bankruptcy claims. In addition, Aloha agreed to allow the PBGC to have unsecured claims of $154.4 million against the carrier for the terminated pension plans. The agency would be paid on a pro-rata basis with other unsecured creditors and would get 70% of the available proceeds.
PBGC attorney Stephen Schreiber made a last-minute phone call from a court’s restroom corridor to get the agency’s approval of the deal, according to the report.
David Banmiller, president and chief executive of Aloha did not give a specific date for the airlines exit from bankruptcy.