US - Pilots at United Airlines have hit out at last week's decision by the Pension Benefit Guaranty Corporation (PBGC) to end the company's pension plan for pilots. The Air Line Pilots Association (ALPA) said they would "vigourously oppose" any effort by the PBGC to take over the plan before May 1, 2005 and accused the PBGC of singling out the pilot group for "punitive" and "vindictive" treatment.
Last week, the PBGC announced that it would assume responsibility for the pensions of more than 14,000 active and retired pilots at United, stating that the move would save them around US$140m in additional losses.
PBGC’s executive director Bradley Belt said: “In conjunction with the company’s bankruptcy proceeding, PBGC’s financial advisers have come to the conclusion that United Airlines can afford at most only three of its pension plans.”
He added: “I hope the plight of participants in airline pension plans puts an exclamation point on the need for Congress to strengthen the funding rules for defined benefit plans.”
Reacting angrily to the decision, Duane Woerth, president of the ALPA said: “This is bad business and a deplorable move by an entity that purports to care for those who have earned pension benefits over decades of faithful service. As president of ALPA, I will use every resource at my disposal to fight this duplicitous move.”
The association said that its tentative agreement with United did not permit the termination of the pilot pension plan without a final judicial determination that pension termination was necessary for the company to emerge from the bankruptcy or at any point prior to May 1, 2005.
The pilots union agreed last month not to oppose termination of their pension plan and in exchange the pilots would receive $550m in convertible securities.
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