U.S. Airways pilots lose appeal over pension benefits
By Carol Kennedy
Published on May 02, 2006
The pilots filed the lawsuit against Pension Benefit Guaranty Corp., the federal agency that backs private pension plans, alleging that the pension agency incorrectly calculated their benefits after U.S. Airways Group Inc. filed for bankruptcy in August 2002.
The court determined that the claim must be pursued through administrative avenues and stated that "the pilots have not yet exhausted their administrative remedies." The court further noted that the pilots filed the lawsuit before receiving the Pension Benefit Guaranty Corporation's final determination on the issue, and that the agency had corrected many of the alleged errors since the lawsuit was filed.
Companies pay insurance premiums to pension agencies; however, when a company can no longer support the pension plan, the agency acquires the assets and liabilities and pays a limited amount of promised benefits to retirees.
The pilots' defined benefit pension plan was terminated by U.S. Airways in March 2003. As a result, many pilots' benefits were significantly reduced. The airline's original plan would have provided much more money than was guaranteed by the federal pension agency.
U.S. Airways was purchased by America West in September 2005, which allowed the company to emerge from bankruptcy for the second time in two years.
Employee pension plans have been the source of controversy in many airline bankruptcy cases.
Spokespersons for the pilots and PBGC were not available for comment.
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