A bill by Senator Rick Santorum, (R-Pennsylvania) gives legal authority to federal pension insurer Pension Benefits Guaranty Corp., to approve the proposed longer payout schedule, the Associated Press reported. The bill would help the air carrier fulfill its “financial obligation to the hardworking employees by providing them the ability to restructure their pension plan,” Santorum said in a statement quoted by the AP.
A US Airways reorganization plan, filed two weeks ago in federal bankruptcy court, hinges largely on reducing its estimated $3.1 billion pension fund liabilities, the AP said. US Airways is carrying a $61 billion debt, lost $2.1 billion in 2001 and said it needs to cut costs by $1.6 billion to remain viable.
The reorganization plan intends to pull the airline out of bankruptcy by March – a goal some analysts have called optimistic
US Airways is the nation’s fifth-largest airline , and employs about 32,000 workers – down from its pre-September 11 workforce of more than 46,000. An estimated 17,000 employees work in Pennsylvania. US Airways hubs are in Philadelphia, Pittsburgh and Charlotte.
A key player in the US Airways turnaround has been the Retirement Systems of Alabama (RSA), which will invest $240 million in the airline upon its emergence from bankruptcy. The RSA will hold the lead investor position with a 36.6% stake and receive eight seats on a newly reconstituted 15-member Board of directors.
The Alabama pension system would receive 19.7 million shares, as well as the entire issue of new preferred shares. That will give the RSA 72% voting control, due to the combination of common and preferred holdings. (See US Airways Reaches Tentative Agreements with Unions, RSA ).