- The Washington Times - Saturday, March 29, 2003

US Airways won final approval from a federal judge in Alexandria yesterday for a lower-cost pension plan for its pilots, paving the way for the airline to emerge from bankruptcy by its self-imposed deadline of Monday.
The pension was the last major segment of the airline's restructuring plan that needed to be resolved before US Airways could reduce its costs enough to operate profitably.
"I don't want to jinx it but I'm highly confident we will close on time," said David Siegel, US Airways' chief executive officer, as he stepped out of the courtroom.
Other issues must be resolved, such as a new agreement with a company that processes the airline's credit-card transactions, but US Airways officials described them as relatively minor.
"The weekend is going to be spent executing literally hundreds of transactions," said Chris Chiames, US Airways' vice president of corporate affairs. "The focus is on completing them by Monday."
He said the company hoped to announce its formal emergence from bankruptcy Monday afternoon.
The airline has wrung $1.9 billion in cost concessions from its unions, vendors and lessors since it declared bankruptcy in August.
The Air Line Pilots Association (ALPA) agreed last week to forfeit its defined benefit plan and replace it with a defined contribution plan. Pensions for the pilots would then depend on the amount of money the airline contributes to the plan annually, rather than a fixed formula based on their years of service.
The pilots' annual pensions would drop from between $50,000 and $70,000 per year to about $28,500.
"We engaged in difficult and painful negotiations over these last few weeks," Richard Seltzer, ALPA attorney, said during the court hearing.
US Airways said it had no other choice. The $1.6 billion in payment obligations over the next seven years required by the defined benefit plan would have prevented the airline from emerging from bankruptcy.
The new plan reduces US Airways' contributions to roughly $1 billion over the next seven years.
The Pension Benefit Guaranty Corp., the federal agency that regulates pensions, said before the hearing it would not object to the new pension agreement between US Airways and its 3,700 pilots.
At the end of the testimony, Judge Steven Mitchell said, "I'm going to go ahead and grant the motion."
The federal Air Transportation Stabilization Board made emergence from bankruptcy a condition for US Airways to receive $900 million in loan guarantees. The government would agree to repay the loans if the airline defaults on them.
The loan guarantees are a condition of private investors who are offering $1.24 billion in loans and equity investments. Airline officials said the cost-cutting helped but the financing also is needed to keep US Airways operating.
The pilots were skeptical of US Airways' estimate on the amount their pension plan was underfunded until they hired their own actuaries, who agreed with the airline's assessment.
US Airways' other cost-cutting ventures have included laying off about one-third of its pre-September 11 work force of 46,000 employees. Employees also agreed to $1 billion per year in wage concessions.
The company said when it filed for bankruptcy protection that it lost $2 billion in 2001. Industry analysts initially said the airline's prediction of emerging from bankruptcy protection by March 31 was unrealistic.

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