Byline: Tom Ramstack, THE WASHINGTON TIMES
US Airways and its pilots union reached an agreement on an underfunded pension plan during the weekend, clearing a critical hurdle to the air carrier's emergence from bankruptcy protection to free more than $1 billion in financing.
Arlington-based US Airways' efforts to eliminate its pension obligations have sent a chill through the retired pilots, whose lifestyles could be altered for the rest of their lives.
The airline has sought to restructure the pilots' pension plan to reduce its costs. Under the existing plan, the airline estimates, it will have to contribute $1.6 billion during the next seven years to keep the plan solvent.
The company believes it can afford to contribute about $850 million. It has proposed canceling the existing plan and using the $850 million to start a smaller plan.
The agreement on a new program was made Saturday between US Airways and the master executive council of the Air Line Pilots Association, both parties' Web sites said. Details were not disclosed. The revised plan requires the approval of the federal Pension Benefit Guaranty Corp., which guarantees employer pensions.
Spokesmen for US Airways and the union did not return telephone messages yesterday.
The stock market's poor performance the past three years has withered many companies' investments, leaving them with pension-fund deficits that are cutting away at profits.
US Airways' retirees have been worried that they will lose a chunk of the regular benefit checks they will receive for the rest of their lives.
One of them is Wayne Grimes, a 63-year-old pilot who retired from US Airways after 30 years and lives with his wife in Moneta, Va.
"It's kind of taking away my play money," Mr. Grimes said before the deal was announced. "I was counting on this money for extra things around the house here and vacations. We're definitely going to have to cut back on those things."
Mr. Grimes considers himself lucky compared with some pilots. He has opted to take 75 percent of his retirement benefits in a lump sum and the rest in an annuity that gives him monthly checks.
Some retired pilots chose to take all their benefits as annuities, which means they risk losing much of their $75,000 to $80,000 per year in payments.
Retired US Airways pilots have organized an association they call the Soaring Eagles.
Tom Davis, the group's spokesman, said some of his fellow retired pilots who depend on annuities are becoming despondent.
"Their life insurance has been canceled, and their health benefits have been changed twice in the last six months," he said. "They are selling their assets. Their own personal feeling is that they should have done better at managing their personal affairs."
US Airways officials say they are merely confronting difficult realities.
Replacing the pilots' pension plan is "critical to the company emerging from Chapter 11" bankruptcy protection, spokesman David Castelveter said.
"It is the only time we have been in this situation," he said. "It was predicated mostly because of the market conditions stemming from the horrific events of September 11."
Many companies and retirees face similar problems. …