NEW YORK ( TheStreet ) -- The Pension Benefit Guaranty Corp., the government agency that guarantees pension benefits, was a key player in the successful bankruptcy restructuring of the U.S. airline industry. But it played its most complex role at American Airlines ( AAL), where it helped creditors decide between two competing management teams.
For that, the Association of Professional Flight Attendants recently awarded its Edward M. Kennedy Award for Public Service to Josh Gotbaum, PBGC director from 2010 to 2014, and the agency's staff.
"But for the careful work of the PBGC, the merger probably would not have happened," Gotbaum said, in an interview. "The management of American Airlines didn't want to do the merger -- their analysis said the merger would be terrible. The management of US Airways wanted to do the merger; they produced an analysis that said the airline merged would do better than it would on its own.
"So who did the objective analysis?" Gotbaum asked. "The answer was the PBGC, (which) did reliable financial work on what the airline would look like standalone and what it would look like if merged with US Airways."
According to APFA, "Though it began as a far-fetched plan, the merger eventually gained the support of the entire creditors' committee due in large part to the efforts of organized labor and the PBGC." As a result, legacy American flight attendants received equity in the new company as well as a new contract with a strong, competitive network carrier, the union said. US Airways flight attendants also secured an improved contract.