In the letter , U.S. Senator Frank Lautenberg (D-New Jersey) and other lawmakers asked the PBGC to keep US Airways on the hook for some of the shortfall existing when the carrier handed the pension plans to the private-sector pension insurer in 2005. When the PBGC agreed to cover the liabilities of three of US Airways’ pension plans, which were 40% funded, the total was the second largest liability taken on by the PBGC (See PBGC Takes Over Three US Airways Pension Plans at $2.3B Cost ). The liability total included the pilots’ plan taken on in 2003.
Lautenberg said in the letter that US Airways’ reported profit of $292 million over the first three quarters of 2006, as well as cash and investments totaling $3 billion at the end of the third quarter, put it in a position to help fund the liabilities. “If US Airways now clearly has ability to generate considerable cash and has easy access to credit markets, the company’s ability to restore its terminated pension plans must be fully explored,” the letter asserted.
Despite his acclaim of the airline’s improved financial status, Lautenberg declared his disapproval of US Airways’ $10.2 billion offer to buy larger Delta Airlines, saying that the federal government “shouldn’t allow a company that dumped its pension responsibilities buy another. US Airways should take care of its employees before taking over another airline.”
Senators Johnny Isakson (R-Georgia), Maria Cantwell (D-Washington), Saxby Chambliss (R-Georgia), and Patty Murray (D-Washington) also joined Lautenberg in signing the letter.
A federal judge approved a settlement in September 2005
between the airline and the PBGC in which US Airways would
pay $13.5 million in cash and give the PBGC a $10 million
note and 70% of unsecured creditors’ stocks. The deal
was considered a step in the direction of resolving the
insurer’s nearly $2.7 billion in claims in the airline’s
bankruptcy estate (See
PBGC-US Airways Pension Deal Gets Court