Hawker Beechcraft Inc., Wichita, Kan., will terminate its two non-union pension plans and freeze the defined benefit pension plan for machinists union workers as part of its bankruptcy process, said Justin Dini, company spokesman.
Employees who are members of the International Association of Machinists and Aerospace Workers approved by a 97% margin accepting the company's offer to freeze the defined benefit plan, effective Jan. 1, 2013, confirmed Frank Larkin, union spokesman.
“Bankruptcy is not a good place for a collective bargaining agreement,” Mr. Larkin said in a telephone interview. “It's not unusual for proposals to be more extreme” in this situation than what was offered.
Union workers, will be moved into a new defined contribution plan. Salaried employees hired after Jan. 1, 2007 are already in a defined contribution plan.
Hawker Beechcraft, its lenders, union leaders and the Pension Benefit Guaranty Corp. have all agreed to the arrangement, Mr. Dini said in a telephone interview. All agreements are subject to approval by the bankruptcy judge. The company filed for bankruptcy May 3 in U.S. Bankruptcy Court for the Southern District of New York.
The three plans have a combined $769 million in assets with $1.4 billion in benefit obligations. Mr. Larkin said the union plan had about $500 million in assets with an unfunded liability of $158 million.
Hawker Beechcraft estimates 100% of union plan participants and more than 99% of non-union participants will receive the full amount of pension benefits already vested, according to a statement from the company on Thursday.
The company is in advanced negotiations with Superior Aviation Beijing Co., Beijing, on a potential acquisition. Superior supports the agreement in principle with the PBGC and proposed DC plans, according to the Hawker Beechcraft statement.