US Airways: Employees 'Shouldn't Count' on Pensions

October 8, 2004 ( - US Airways simply can't afford to maintain its current pension plans, lawyers for the air carrier told a federal bankruptcy judge here Thursday.

If the airline is to become solvent, the company has to cut back, USA TODAY reported. That means workers “shouldn’t be counting on their pension” at least in its current form, said US Airways lawyer Brian Leitch. Leitch said US Airways’ plans will be frozen or terminated, “And there’s no scenario where the plans will be maintained.”

Thursday’s hearing followed the Arlington, Virginia-based airline’s September 12 bankruptcy court filing in which it requested court permission to slash its pension obligations and cut worker pay by 23%.


Leitch’s comments shocked some employees at the court hearing, including Teddy Xidas, president of the union for US Airways flight attendants in Pittsburgh. She said she joined US Airways almost 25 years ago because of its pension plan. “It makes this job a career. That’s why we fight for it,” Xidas told the newspaper.

US Airways failed to make a September payment of $110 million to its defined-benefit pension plan for mechanics and flight attendants.

A lawyer for the Pension Benefit Guaranty Corporation (PBGC), the agency which insures private-sector pensions, urged the bankruptcy judge to require US Airways to fully pay its obligations.” As long as plans remain ongoing, they must be funded,” said PBGC lawyer Susan Birenbaum. The PBGC estimates the US Airways plan is underfunded by $2.3 billion, $2.1 billion of which is guaranteed by the PBGC. Another carrier with its own pension woes, United Airlines, has pension plans that the PBGC estimates are underfunded by $8.3 billion, $6.4 billion of which is guaranteed by the PBGC.

The agency’s director cited the airline sector’s financial struggles and resulting pension problems as one reason for a suggested package of pension reforms (See  PBGC Head Forecasts ‘Significantly Increased’ Shortfall ).