US Airways Inc., Arlington, Va., and the PBGC reached a proposed settlement to resolve the agency's roughly $2.5 billion in claims in the airline's Chapter 11 bankruptcy protection case, according to court documents. The airline would pay the PBGC $13.5 million in cash and grant the agency a $10 million, seven-year note with interest accruing at 6% annually. US Airways would also grant the PBGC 70% of the stock that goes to the firm's unsecured creditors. US Airways filed the proposal today with the U.S. Bankruptcy Court in Alexandria, Va., which is overseeing the company's Chapter 11 reorganization.
Earlier this year, the PBGC took over the underfunded US Airways pension plans for flight attendants, machinists and passenger service agents. The agency estimated the three plans had $1.7 billion in total assets and $4.2 billion in liabilities. Jeffrey Speicher, a PBGC spokesman, could not comment on the proposed settlement by press time.
US Airways is requesting a Sept. 2 hearing on the proposed settlement.
