The PBGC will take over the defined benefit plan of Alabama Aircraft Industries Inc., Birmingham.
The airplane maintenance firm filed for Chapter 11 bankruptcy protection in February.
As part of the filing, the company sought to remove the pension plan from its collective bargaining agreement with the United Auto Workers. Faced with having the whole collective bargaining agreement thrown out, the union agreed to allow the plan to be terminated, Randy Shealy, CFO of Alabama Aircraft, said in an interview. Officials with the UAW legal department and communications office were not available for comment.
The pension plan has $82.4 million to cover $142.8 million in liabilities, according to estimates by the Pension Benefit Guaranty Corp. The PBGC expects to pay about $58.9 million of the $60.4 million shortfall.
Mr. Shealy said most of the plan participants are retired.