PHILADELPHIA (AP) - A federal bankruptcy judge has approved a new collective bargaining agreement between the financially troubled Philadelphia Orchestra and its musicians union.
The four-year contract, ratified about two weeks ago by players and the Philadelphia Orchestra Association board, takes effect Nov. 1.
At a hearing Wednesday, U.S. Bankruptcy Judge Eric Frank said he would approve the deal. The written order was issued Thursday, said Lawrence G. McMichael, the orchestra's attorney.
"I think the best way to say it is we were thrilled that we were able to hammer out something" after months of intense negotiations, McMichael said.
Terms of the new contract call for shrinking the number of players from 105 to 95 through retirements and attrition and for cutting salaries about 15 percent. The minimum salary for Philadelphia Orchestra musicians is currently about $125,000 a year.
The agreement also calls for moving musicians' pensions to a defined contribution plan from the current defined benefit plan. A defined benefit plan provides a guaranteed monthly benefit for workers, while a defined contribution plan shifts responsibility for retirement planning and investing to workers but doesn't guarantee a specific amount of money based on years of service.
The pension change now goes for approval to the Pension Benefit Guarantee Corp., an independent federal agency that insures pensions of more than 44 million Americans.
The orchestra estimates it will save roughly $38 million over the course of the four-year pact.
In April, the renowned 111-year-old symphony became the first major U.S. orchestra to file for Chapter 11 bankruptcy protection. It has struggled with dwindling attendance and donations, shrinking endowment income, high labor costs, the recession and an aging audience.
The bankruptcy judge last month permitted the orchestra to end its six-year business relationship with Peter Nero and Philly Pops, an arrangement the orchestra claimed was hurting its finances.
A major next step will be addressing the orchestra's rental agreement with the Kimmel Center, McMichael said. The orchestra is seeking to renegotiate its lease; meanwhile the Kimmel has said the orchestra owes it $1.4 million in back rent.
The orchestra will not meet its initial goal to emerge from bankruptcy by the end of the year but should be able to do so in early 2012, McMichael said.
Philadelphia Orchestra: http://www.philorch.org