Under the agreement, the Pension Benefit Guaranty Corporation (PBGC) will get cash, a note and an ownership stake in the reorganized airline to settle its claims rising out of US Airways’ termination of its pension plans this year, according to a Dow Jones news report. The pact also takes away a potential barrier to the air carrier’s exit from US Bankruptcy Court through its merger with America West.
The agreement, which requires bankruptcy court approval, gives the PBGC a $13.5 million cash payment, a $10 million note and 70% of the stock available to unsecured creditors under US Airways’ proposed reorganization plan.
The PBGC assumed responsibility for the Arlington, Virginia-based airline’s pensions representing 51,000 employees, including flight attendants and machinists, after the US Bankruptcy Court cleared the airline to terminate the plans in January (See PBGC Takes Over Three US Airways Pension Plans at $2.3B Cost ). The pension agency had already taken on the airline’s pension plan for its pilots.
US Airways filed for bankruptcy-court protection for the second time in September 2004.