The airline said it is facing more than $45 million in pension funding requirements over the next 25 months and needs the money instead for its Chapter 11 reorganization, according to the Honolulu Star Bulletin. Hawaiian said its Air Line Pilots Association (ALPA) pension plan is currently $67 million underfunded, with $99 million in assets and $166 million in liabilities. The airline said in its year-end filing it was $115.8 million underfunded for all of the company’s pension plans.
The airline said it would not change any pension benefits. Hawaiian said it currently is required to fund more than $140 million in pension obligations over the next seven years.
“Our pension plan is severely underfunded, like that of many other airlines, automobile companies and steel companies,” Hawaiian trustee Joshua Gotbaum told the newspaper. “We filed the (US Bankruptcy Court) motion to give us time to work with these pilots and resolve the issue. The purpose of the motion was to buy us time and preserve cash.”
After losing $58 million in 2002, Hawaiian filed for bankruptcy protection on March 21.
Hawaiian’s other two major unions, the International Association of Machinists and the Association of Flight Attendants, both have 401(k) plans with matching contributions rather than pensions and were not affected by the filing. Hawaiian’s executive officers also have 401(k)s but no separate pensions. Pension plans of the IAM and nonunion employees that were frozen in 1993 were not affected.
A number of other airline plans have had similar issues. US Airways Group Inc., which emerged from Chapter 11 on March 31, scrapped its entire pension plan after being underfunded by $2.4 billion as of December 31, 2002 (See PBGC Assumes US Airways Pension Plan ). United Airlines parent UAL Corp., which is expected to come out of bankruptcy in the spring, reported at year-end that its pension plan was underfunded by $6.4 billion (See Unions, PBGC Tapped for UAL Creditor Committee ).
Northwest Airlines, whose pension plan was underfunded by $4 billion at the start of the year, received permission from the US Department of Labor to put stock of one of its subsidiaries, Pinnacle Airlines, into Northwest’s pension plan (See DoL Gives Thumbs Up to NWA Stock Pension Contribution ).