PBGC Can't Green Light US Airways Pension Rescue

December 24, 2002 (PLANSPONSOR.com) - The federal pension insurer doesn't have the legal authority to OK a US Airways plan to terminate its pension plan and restart it at a different funding level.

The was the response from the Pension Benefit Guaranty Corp. (PBGC) to the ailing air carrier’s goal of digging its employee pension plan out of a $3.1 billion shortfall, according to a report in the Beaver County (Pennsylvania) Times.

Bankrupt US Airways had proposed to put $2 billion into the pension fund over the next seven years, with the balance to be paid in installments

“It is not within our legal power to do what they want to do,” the PBGC’s Jeffrey Spicher told the newspaper, according to the report.

US Airways certainly must resolve the pension issue before it can emerge from Chapter 11 bankruptcy protection as planned in March. A US Bankruptcy judge will review US Airways’ plan on January 16, and if approved, it will go to the airline’s creditors for a vote by the end of March.

But the deadline really depends on when the federal Air Transportation Safety Board decides to give final approval on a $1 billion loan to US Airways (see  US Airways Reaches Tentative Agreements with Unions, RSA ). That could happen anytime between now and the company’s emergence from bankruptcy, the newspaper said.