US Airways Profit Prompts Senators' Pension Query

A group of senators has asked the federal agency that guarantees pensions to consider restoring US Airways' pilot pension plans, citing the carrier's improving economic health.

Frank R. Lautenberg, D-N.J., who sits on the Commerce, Science and Transportation Committee, sent a letter Jan. 29 to the Pension Benefit Guaranty Corporation (PBGC) asking it to consider restoring the terminated pension plans "in light of the substantially improved financial condition of the company."

In December 2006, the PBGC agreed to take over pension payments for US Airways pilots so that the struggling airline could emerge from bankruptcy. According to Lautenberg's letter, at the time the airline had $4.8 billion in unfunded pension liabilities assumed by the PBGC.

Since then, the Phoenix-based airline has emerged from bankruptcy and is in significantly better financial health. It's close to completing a merger with America West and has offered a $10.2 billion hostile bid to buy out Atlanta-based Delta Air Lines.

Lautenberg's letter criticizes US Airways for moving so quickly on Delta after shedding its pension debt.

"The federal government shouldn't allow a company that dumped its pension responsibilities [to] buy another," Lautenberg said. "US Airways should take care of its employees before taking over another airline."

During a Jan. 24 Commerce Committee hearing on the merger, Lautenberg asked Doug Parker, chairman and chief executive officer of US Airways, why his airline can't use the capital lined up for purchasing Delta to reinstate its pension programs.

Parker said the financing is fronted by lenders whose primary interest is in the Delta deal.

The company reported a fourth-quarter profit of $12 million, or 13 cents per share, compared with a loss of $261 million, or $3.27 per share, during the same period in 2005.

The PBGC may re-evaluate a terminated pension plan for reinstatement under certain conditions, including "improved financial circumstances."

Four other senators signed the letter: Washington Democrats Maria Cantwell and Patty Murray and Georgia Republicans Johnny Isakson and Saxby Chambliss.

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