The U.S. government's pension insurer said Wednesday it had taken over the pensions of US Airways' (UAIRQ) machinists and flight attendants.
The Pension Benefit Guaranty Corp. estimates the underfunded pension plans will cost it $2.3 billion. That comes on top of a $726 million claim for US Airways' pilot pension plan, which the PBGC took over in 2003. The airline's $3 billion total claim is the second largest in PBGC history after Bethlehem Steel's $3.7 billion claim in 2003.
"The PBGC will protect the pension benefits of US Airways' workers and retirees," said Bradley Belt, the federal corporation's executive director. "But the pension safety net is badly frayed."
The White House has proposed reforms aimed at helping the PBGC meet its obligations. The federal corporation receives no tax revenue and funds operations largely by insurance premiums that companies with pension plans pay.The PBGC's latest move was expected after the judge overseeing US Airways' Chapter 11 bankruptcy last month authorized the termination of the flight attendants' and machinists' pensions. In December, the PBGC moved to take over responsibility for pilot pensions at UAL's (UALAQ) United Airlines. It expects to be liable for about $1.4 billion of that plan.