US Airways, Arlington, Va., is asking the IRS for permission to delay contributing $67.5 million to its two pension plans for 2004. If the IRS approves the waiver, the airline will be able to contribute the money over five years, instead of during the normal 18-month schedule. The airline, which remains in a financially precarious condition after emerging from bankruptcy more than a year ago, wants the $28.6 million it contributed to its pension plans for flight attendants and machinists so far this year to be made part of its contribution for 2003, due by Sept. 15. The company terminated its underfunded pension plan for pilots as part of its reorganization in bankruptcy, and set up a defined contribution retirement plan instead. If the IRS rejects the airline's application to delay pension plan contributions, it will "significantly impact" the company's ability to remake itself as a viable airline and cause "substantial business hardship," according to a document given to employees.
The PBGC will consult with the IRS for appropriate collateral to be pledged in exchange for the waiver. "Our interest is to ensure that the pension plans receive appropriate protection. In the view of the PBGC, skipping a pension payment is equivalent to borrowing from the pension plan to finance the company. We want to make sure that any such loans are secured," said Jeffrey Speicher, a PBGC spokesman.