Aloha's pension cop-out outrages workers
By Rick Daysog
Advertiser Staff Writer
By Rick Daysog
Aloha Airlines' employees and retirees blasted the company's proposal to terminate its pension plans, saying yesterday that the company is using the bankruptcy process to renege on its obligations.
More than 100 Aloha workers appeared at a U.S. Bankruptcy Court hearing to express their outrage at Aloha's proposal to reject its collective bargaining agreements and terminate its defined-pension plans for 3,000 employees.
"You work 30 years building up a retirement but when it's not convenient anymore for these companies to honor these obligations, they simply use the bankruptcy courts as a tool to cut them loose," said Steve Brenessel, who retired last year after 14 years as an Aloha pilot.
U.S. Bankruptcy Judge Robert Faris, who has scheduled another day of hearings Monday, will have the final say on whether the company can terminate its pension plans. Aloha has said it wants to end the pension plans on Dec. 31 and hand them over to the Pension Benefit Guaranty Corp., the federal agency that insures basic pension benefits.
Aloha, which filed for Chapter 11 reorganization in December, said it needs to jettison the pensions to allow a new buyer to take over the state's second largest airline.
Last month, the airline announced that it was being sold to a group headed by California billionaire Ron Burkle's Yucaipa Companies.
"Without the pension change, no investor is willing to go forward with a commitment," said Charles Dyke, an attorney for Aloha.
The airline says most of its employees will see little change in the level of pension benefits if it hands them over to the federal agency.
The exceptions are pilots and retired pilots, whose benefits could drop significantly.
Brenessel, who retired for medical reasons last year at age 54, said his benefits will be cut from $3,400 a month to about $1,400 a month under the new plan.
When the federal pension agency takes over a company's pension plan, it caps pension benefits for retirees 65 years or older at about $45,000 a year, which is about half the amount many of Aloha's senior pilots are entitled to.
Anyone who retires before age 65, isn't eligible for the full $45,000 a year.
Pilots are required by law to retire at age 60, meaning that they aren't entitled to the maximum benefits under a pension administered by the federal agency, Brenessel said.
David Talbert, who retired last year after working 27 years as a pilot with Aloha, said he stands to see a 60 percent reduction in his monthly pension benefits if the judge rules in the airline's favor.
Talbert, 61, said he now has to consider the prospect of going back to work.
Opposition to the pension proposal wasn't limited to pilots.
"I think the membership is very defiant and angry that the company would go back on their promise after we made so many sacrifices for the company," added Karen Nakaoka, a vice president with the 400-member Aloha unit of the Association of Flight Attendants.
During yesterday's hearing, Aloha argued the airline has no choice but to seek the new concessions.
Besides the termination of the pensions, the airline is also negotiating with unions on other concessions, including requiring workers to pay 20 percent of their medical insurance premiums, which are now fully covered by the company.
Dyke, the airline's attorney, said Aloha has met with nine potential buyers or lenders during the past year and all have said they need the airline to terminate the pensions before they would invest in the airline.
Dyke said the airline's lenders — Ableco Finance LLC and Goldman Sachs Credit Partners LP — could begin liquidation proceedings if the current sale to the Yucaipa group falls apart.
"It's obvious what's being requested is going to have an adverse impact on their lives," added Lorenzo Marinuzzi, attorney for Aloha's unsecured creditors, which supports the termination of the pensions.
"What is also terrible is the shutdown of the airline and the loss of 3,500 jobs."
At the end of yesterday's hearing, Faris urged union and management to continue to negotiate a settlement over the weekend.
"Any deal you make will be much better than any deal that I impose on you," Faris said.
Reach Rick Daysog at email@example.com.