Judge's action allows US Airways to emerge from bankruptcy

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Judge's action allows US Airways to emerge from bankruptcy

ALEXANDRIA, Va. (AP) =97 US Airways will emerge from bankruptcy protection=
 on=20
Monday after a judge on Friday gave his final approval to the airline's=20
termination of its pilots' pension plan. That puts the Alabama Retirement=20
System in position to assume a controling interest in the company. The=20
pension issue had been the last hurdle to the airline emergence. On Friday=
=20
morning, the Federal Pension Benefit Guarantee Corp. gave its approval to=20
the pension plan, which cleared U.S. Bankruptcy Judge Stephen Mitchell to=20
take action Friday afternoon. Airline spokesman Chris Chiames said the=20
airline will work through the weekend to clear up technical matters so that=
=20
it can emerge on Monday. "Think of it as a huge closing on a house. The=20
weekend is going to be spent executing literally hundreds of transactions."=
=20
If all goes well, Chiames said, the airline will receive a $900 million=20
federally guaranteed loan and a $240 million investment from the Retirement=
=20
Systems of Alabama on Monday. That financing was only available to the=20
airline upon emergence from bankruptcy. The RSA is receiving a 38% share of=
=20
the airline and a controlling interest on the board of directors in return=
=20
for its investment.

Once the airline leaves bankruptcy, it can gain access to a $900 million=20
federally guaranteed loan and a $240 million investment from the Retirement=
=20
Systems of Alabama, which will receive 38% of the company's stock and=20
majority control of the board of directors. US Airways, the nation's=20
seventh-largest carrier, filed for bankruptcy in August, nearly a year=20
after the Sept. 11 attacks sent the airline industry, particularly US=20
Airways, into a tailspin. The airline has shed a third of its capacity and=
=20
a third of its pre-Sept. 11 workforce of 46,000 employees, and cut its=20
costs while in bankruptcy by $1.9 billion a year. The final cost cut came=20
by terminating the pilots' pension plan. That plan will now be taken over=20
by the PBGC, and US Airways will replace the old plan with a smaller plan.=
=20
The PBGC will now take over the old plan and pay out reduced benefits to=20
the pilots. Those benefits will be supplemented by the company's new plan.=
=20
The PBGC's review concluded that the combined benefits pilots will receive=
=20
are not as good as what they would have received under the old plan. If=20
they had been equivalent, the PBGC would have rejected the plan as an abuse=
=20
of the PBGC's role as a pension insurer. US Airways will save an estimated=
=20
$600 million over the next seven years under the new pension plan. The=20
airline and pilots agreed on the new plan last weekend, and the PBGC began=
=20
its review on Monday. "We appreciate the efforts of the PBGC to respond=20
quickly and favorably in its review," said US Airways President and Chief=20
Executive David N. Siegel. "We have impressed upon the agency's staff our=20
efforts to work cooperatively with (the pilots' union), given the=20
leadership and sacrifices we have seen from our pilots."


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