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Friday June 11, 04:10
Court affirms pension plan termination

A federal appeals court has affirmed a lower court’s approval of the termination of a massively underfunded US Airways Group Inc. pension plan covering the airline’s pilots.

The 4th U.S. Circuit Court of Appeals last week rejected arguments by a group of the airline’s retired pilots that the 2003 termination of the plan was not absolutely necessary to develop a workable plan of reorganization to allow the airline to emerge from bankruptcy.

In its opinion, the appeals court noted that a bankruptcy court had determined that termination of the plan, which had $2 billion in unfunded liabilities, was the “only viable option.”

In addition, to “revisit” the termination issue now would be “wholly impractical” given that many other elements of the reorganization plan that allowed US Airways to emerge from bankruptcy last year would have to be reconfigured, the appeals court noted.

The Pension Benefit Guaranty Corp. took over the plan last year and estimated its loss at about $700 million. Many of the airline’s retired pilots took a big financial hit when the plan was taken over. That is because their promised benefits exceeded the roughly $44,000 a year maximum the PBGC guarantees.

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