honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Tuesday, November 29, 2005

Airline, pilots close to deal on pensions

By Rick Daysog
Advertiser Staff Writer

Aloha Airlines could announce as early as today an agreement with pilots on whether to terminate their pensions.

Aloha said last month it planned to terminate pensions for more than 3,000 employees and hand them over the Pension Benefit Guaranty Corp., the federal agency that insures basic pension obligation.

Aloha's pilots — some who stand to lose up half of their retirement benefits if the pension is taken over by the federal agency — are the last holdouts, fighting the pension termination.

Unions representing most of Aloha's other employees have agreed to the pension termination in part because the federal agency promises to pay out the full amount they are owed.

Because the pilots' pensions typically exceed limits imposed by the federal agency, their retirement pay could be cut.

Aloha said the new labor agreement with pilots is crucial to its plan to emerge from bankruptcy protection by the end of the year.

Aloha, which filed for bankruptcy protection last December, is in the process of being sold to an investment group that includes former football star Willie Gault and California billionaire Ron Burkle's Yucaipa Companies.

Yesterday was the deadline for federal Bankruptcy Judge Robert Faris to rule on the airline's request to terminate the pensions, but Faris put off a decision until today after the airline said it was close to a deal with the pilots union.

"There's so much at stake for so many people and parties that we'll figure out a way out of this," said Aloha Chief Executive Officer David Banmiller.

Banmiller declined to discuss specifics. Mike Feeney, spokesman for the 380-member pilots union, confirmed that both sides are "close to an agreement on what to do with the pensions" but declined to elaborate.

Any deal would require approval by a majority of the pilots as well as Faris.

Faris yesterday asked both sides to resolve the matter through negotiations, saying any decision he makes could end up hurting everybody.

Earlier this month, the 2,400-member machinist union approved the plan to turn its pension over to the federal agency.

Also yesterday, members of the airline's flight attendant union voted 178 to 51 to approve a new contract.

Flight attendants don't have a defined benefit pension plan but have a defined contribution plan which will not be terminated. A defined contribution plan means the company does not guarantee pension payments but helps employees save for retirement.

Under the new contract, the airline requires flight attendants to share some of their medical costs.

"None of us felt we had any options left," said Peggy Gordon, president of the Association of Flight Attendants 405-member Aloha unit. "There's little trust left in the company and there's a feeling of resignation."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.