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The bankruptcy court's approval depends on the airline's agreement with pilots over pensions.
©Associated Press
March 19, 2003
ALEXANDRIA, Va. -- A bankruptcy judge on Tuesday approved US Airways' plans to emerge from bankruptcy by the end of the month, provided the airline can reach agreement with its pilots on a new pension plan.
The Air Line Pilots Association has objected to the airline's efforts to terminate the existing pension plan and hand it over to the federal Pension Benefits Guaranty Corporation.
The old plan would be replaced with a new, smaller plan that would save the company about $800-million over the next seven years. Many of the pilots could see their benefits cut in half.
US Airways hopes to emerge from bankruptcy by March 31. The deadline is an important one because the airline cannot obtain $1-billion in financing until it emerges from bankruptcy. And the company has warned that it may not have enough cash to continue operations much beyond the end of the month.
The airline's creditors voted overwhelmingly on Monday to approve the reorganization plan. The airline said Monday that all the creditor classes approved the plan with a minimum support of 81 percent.
Unsecured creditors will receive only 1 to 2 cents on the dollar against their claims. Shareholders will get nothing; they did not vote on the plan.