US-The Pension Benefit Guaranty Corporation (PBGC) will continue pursuing the termination of United Airlines pilot's pension plans despite a union vote ratifying a new agreement and the termination of US Airway's US$3bn pilots pension scheme.
“These are separate cases, separate bankruptcies and not related at all,” said Jeffrey Speicher, a PBGC spokesman. ”The same phenomena exists in that both companies are in the same industry, but no, there’s no relation between the two cases.”
The PBGC announced earlier this week that it will absorb the liabilities owed to more than 51,000 flight attendants, machinists and other employees of US Airways. It marks the second largest in the federal insurer’s history, after Bethlehem Steel, at US$3.7bn.
The US Airways termination will not add to the PBGC’s existing US$23bn deficit, as that figure already included the possible termination of the airliner, Speicher said. The insurer is required by its auditors to book probable terminations.
The PBGC has also filed an order in federal court to terminate the pension plan of United Airlines’ pilots, a move which they have calculated would save them an estimated US$140m in additional benefits that would be paid out if the pilots’ pension plan was not terminated on 31 December 2004.
The move has infuriated the union representing United’s pilots, who recently approved an agreement accepting termination of the pilots’ pension plan in return for US$550m in convertible securities. The agreement stipulates that the pension plan will not be terminated before 1 May 2005.
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