US Airways Group Inc., Arlington, Va., asked to be allowed to terminate some of its combined $1.67 billion defined benefit plans and replace them with defined contribution plans, according to documents filed today in U.S. Bankruptcy Court in Alexandria, Va. The carrier, which is under Chapter 11 bankruptcy protection, would terminate the defined benefit plans for flight attendants, machinists and passenger service agents. The request was part of a motion the airline filed seeking to reject collective bargaining agreements with labor groups unless the workers agree to modify the pacts to meet "labor cost reduction targets" set forth by the airline, court papers said.
Terminating the three pension plans and eliminating the funding obligations "is the only way to obtain the reduction in pension costs" that US Airways needs "to compete effectively" with low-cost carriers that don't provide defined benefit plans, according to the filing. "These projected pension funding requirements of nearly $1 billion effectively bar (US Airways) from obtaining access to the estimated $250 million in exit financing necessary to reorganize," the memorandum said.
A hearing on the matter is scheduled for Dec. 2-3. The deadline for interested parties to file responses to the requests is Nov. 24.
Neither the Association of Flight Attendants nor the International Association of Machinists and Aerospace Workers had responded to US Airways' motion by press time. US Airways' passenger service agents this week voted to authorize a strike "or other legal work action" if they cannot reach "a fair, equitable contract," according to a statement issued by the Communications Workers of America, which represents the agents.
