The head of US Airways' pilots union criticized the airline yesterday for singling out the pilots' pension fund for possible termination and said the carrier should instead look to cut costs in other employees' pension funds.
William D. Pollock, who was elected to the airline's board yesterday as part of previous contract negotiations with the union, said in a recorded message that eliminating the pilots' pension fund would "take away the pilots' accrued benefits that we have fought and paid for during our careers, while leaving the pensions of other employee groups and management intact."
US Airways had been grappling with its pension fund, which is underfunded by $3.1 billion, since filing for bankruptcy protection in August. Earlier this month, the Pension Benefit Guaranty Corp., a government agency that insures private pension funds, said the Arlington-based carrier could not stretch out payments to its pension plan from seven years to 30 years as it had requested.
That decision made it more likely that the fund would be terminated and turned over to the agency, which would significantly shrink retirement checks for pilots retiring in the future.
In a message to employees, David N. Siegel, US Airways' president and chief executive, said the airline planned to distribute "detailed information" to the pilots later this week on its intention.
"Clearly this remains the No. 1 issue standing between us and a successful emergence from bankruptcy," Siegel told his employees. "We are going to resolve this issue to meet this company's level of commitment to its pilots."
Siegel said the pension-fund liability has to be resolved for the airline to obtain a $900 million federal loan guarantee and keep $200 million in interim financing from its lead investor, the Retirement Systems of Alabama. Pending approval by a bankruptcy judge, US Airways plans to emerge from bankruptcy by the end of March.
In a Jan. 16 letter to the airline's pilots, Siegel wrote that if the airline was forced to terminate its pension plan, the pilots would not be left without benefits. Instead, he wrote, the existing plan would be replaced with a new plan and pilots would receive benefits from two plans. It wasn't clear how the benefit levels in the combined plans would compare with what pilots are receiving now.
US Airways executives have said the agency would not allow them to terminate the pension funds of its flight attendants and machinists because the pilots' plan represents 70 percent of the unfunded liabilities.
Jeff Zack, a spokesman for US Airways flight attendants, said the airline did not need to seek relief from other employee groups because only the pilots' fund was significantly underfunded.
"Our pensions aren't nearly as expensive," Zack said. "Our pensions just aren't that high. They haven't been a problem."