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Santorum Proposes US Airways Pension Plan

Senator Wants Payments Strung Out Over 30 Years

POSTED: 2:37 p.m. EST January 9, 2003

Sen. Rick Santorum, seeking to bring US Airways out of bankruptcy, wants to let the strapped airline string out $3.1 billion in payments to its employee pension plan over 30 years.

Discussion

The bill will help the airline fulfill its "financial obligation to the hardworking employees by providing them the ability to restructure their pension plan," Santorum, R-Pa., said in a statement released Wednesday night.

US Airways, based in Arlington, Va., declared bankruptcy in August, the first to do so in the travel slump following the Sept. 11 terrorist attacks. The company is carrying a $61 billion debt, lost $2.1 billion in 2001 and said it needs to cut costs by $1.6 billion to remain viable.

A US Airways reorganization plan, filed two weeks ago in federal bankruptcy court, hinges largely on reducing its estimated $3.1 billion pension fund liabilities.

The pension liabilities initially were scheduled to be paid within seven years. Santorum's plan gives legal authority to the federal Pension Benefits Guarantee Corp. to approve stringing out the pension obligation over 30 years, said spokeswoman Erica Clayton Wright.

The reorganization plan intends to pull the airline out of bankruptcy by March -- a goal some analysts have called optimistic. The terror attacks hit the airlines hard; most recently, United Airlines declared bankruptcy last month.

US Airways is the nation's fifth-largest airline, and employs about 32,000 workers -- down from its pre-Sept. 11 work force of more than 46,000. An estimated 17,000 employees work in Pennsylvania. US Airways hubs are in Philadelphia, Pittsburgh and Charlotte.

A spokesman for Sen. Ernest F. Hollings, S.C., the ranking Democrat on the Senate Transportation Committee, said Wednesday evening he was unaware of Republican bailout proposal. A US Airways spokesman could not immediately be reached for comment.


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