Log Out | Member Center

95°F

98°/71°

Hawker Beechcraft retirees object to pension agreement

  • The Wichita Eagle
  • Published Friday, Jan. 11, 2013, at 7:07 a.m.

An ad hoc committee of Hawker Beechcraft retirees has filed an objection to the company’s plan for the Pension Benefit Guaranty Corp. to take over the pension benefits of salaried workers.

Their benefits will be substantially reduced if the plan is approved, the committee said in a court filing with the U.S. Bankruptcy Court for the Southern District of New York.

Hawker Beechcraft filed for Chapter 11 bankruptcy protection on May 3.

The retiree group also objects to what it calls unequal treatment for Hawker Beechcraft salaried and hourly retirees.

Committee members are long-tenured, retired former employees of the company’s Wichita headquarters, the filing said.

The PBGC is a federal agency that administers pension plans for companies that cannot meet their financial obligations to retirees. The agency pays the benefits, but with caps, when an employer is no longer able to pay.

In its filing, the retiree group notes that Hawker Beechcraft is not seeking to terminate the retirement income plan for hourly workers represented by the Machinists union, while it seeks termination of two plans for salaried employees.

“Since the debtors (Hawker Beechcraft) are preserving the hourly plan, they are not permitted to terminate the salaried plan,” the retiree group argues in the filing.

In August, the company reached an agreement with the Machinists union to freeze the current retirement benefits for hourly workers at the end of 2012. It also created a new Retirement Income Savings Plan.

The company also reached a tentative agreement in August for the PBGC to take over and terminate two underfunded Hawker Beechcraft pension plans for salaried employees.

The agreement must be approved by the court. A hearing on the matter is scheduled for Thursday.

Hawker Beechcraft’s three plans for retirees are 56 percent funded, with $769 million in assets to cover $1.4 billion in anticipated obligations, court filings have said.

For a termination of a defined pension benefit plan to be approved, the debtor must establish that it is unable to pay its debts under a reorganization plan and continue in business unless the plan is terminated, the retirees’ court filing said.

“The debtors have not established that they cannot obtain confirmation of any plan of reorganization without termination of the salaried plan,” it said.

In court filings, Hawker Beechcraft’s financial forecasts estimate that the company will have net income after taxes of $92.9 million in 2014, $119.2 million in 2015 and $139.1 million in 2016, the retirees’ court filing said.

At the same time, the company estimates it would cost $32 million in 2014, $41.4 million in 2015 and $51 million in 2016 to fund the salaried plan, it said.

Hawker Beechcraft was able to hire two experts to support its claims, the filing said. But members of the retiree committee don’t have the money to retain its own experts, conduct discovery and test the assertions made in Hawker Beechcraft’s expert reports.

At the same time, Hawker Beechcraft has agreed to pay up to $250,000 for the Machinists union to obtain a financial adviser to give the union advice about the company’s restructuring and to reimburse it for up to $200,000 for costs to negotiate with the company, including the cost of outside counsel fees, the retirees’ filing said.

“Since the debtors have agreed that the union’s expenses in dealing with the debtor’s bankruptcy will be paid by the debtor’s estates, it would be unfair to require the non-union retirees to bear their own costs,” the filing said.

Therefore, an official committee of the participants of the salaried plan should be appointed, it argued.

Reach Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com.

Subscribe to our newsletters

The Wichita Eagle welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views. Please see our commenting policy for more information.

Have a news tip? You can send it to wenews@wichitaeagle.com.

Search for a job

in

Top jobs