That, according to an Associated Press report, was the testimony Tuesday by Steven Kandarian, executive director of the Pension Benefit Guaranty Corp. (PBGC), the federal pension insurer.
In his testimony before a US Senate Appropriations subcommittee, Kandarian maintained that the proposal by Senators Arlen Specter (R-Pennsylvania) and Rick Santorum (R-Pennsylvania) (See Senator Would Give US Airways More Time for Pension Payments) would risk the stability of the 35,000 pension plans the PBGC currently runs, the AP story said.
Besides, Kandarian testified, the PBGC currently doesn’t have the legal authority to authorize the pension payment delay. (See PBGC Can’t Green Light US Airwas Pension Rescue).
Specter and Santorum responded that the PBGC would have to assume responsibility for the airline’s pension if the company goes out of business and can’t meet its $3.1-billion pension obligations at all, the AP reported.
Pension Payments Tied to Bankruptcy Exit
At issue was legislation by Specter and Santorum, who are trying to help bring the Arlington, Virginia.-based airline out of bankruptcy by the end of March. The Senate last week refused to consider the pension extension bill, but Specter said he and Santorum might try to force a vote by a parliamentary procedure.
US Airways, the nation’s sixth-largest airline, was the first to file for bankruptcy during the travel industry slump following the September 11 terrorist attacks. The company is carrying a $61 billion debt, lost $2.1 billion in 2001 and has said it needs to cut costs by $1.6 billion to remain viable.
An estimated 17,000 of US Airways’ 32,000 employees work in Pennsylvania. Its hubs are in Philadelphia, Pittsburgh and Charlotte, North Carolina.
The airline is scheduled to appear in bankruptcy court on Thursday to seek approval for the reorganization plan it outlined last month to emerge from bankruptcy. That proposal largely hinges on a $1 billion loan guarantee from the Air Transportation Stabilization Board that has been tentatively awarded on condition that US Airways settles its massive pension obligations.