The Pension Benefit Guaranty Corp. will take over administration of Hawker Beechcraft’s two pension plans for nonunion and salaried employees and retirees, subject to documentation and court approval, the company said Thursday.
The PBGC, a federal government agency, and Hawker Beechcraft have reached an agreement in principle, the company told employees in a letter Thursday afternoon.
The company will ask the bankruptcy court for approval to terminate its base and salaried pension plans.
If approved, the PBGC – rather than the company – will pay benefits to vested participants in the two plans, the letter said.
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The precise benefits a retiree will receive are subject to an individual’s situation and to PBGC rules.
But an employee retiring at age 65 who does not elect survivor benefits could receive up to $56,000 a year.
The PBGC is a government agency that pays monthly retirement benefits when an employer no longer is able to do so.
Hawker Beechcraft filed for Chapter 11 bankruptcy protection on May 3.
Workers and retirees covered under the Machinists union labor contract are not affected by the agreement with the PBGC.
Machinists union members vote Friday on a proposal from the company on pension benefits affecting them.
The company will also expand the defined contribution plan, called the Retirement Income Savings Plan. It had been for employees hired after Jan. 1, 2007, but now will include all workers.
In the future, Hawker Beechcraft will provide all employees with contributions into the plan instead of future contributions to the pension plans.
The company is in advanced negotiations with Superior Aviation Beijing on a potential acquisition of Hawker Beechcraft’s civilian business by the Chinese company.
Superior supports the agreement in principle with the PBGC and with the proposed defined contribution plan, the letter said.
“We are confident that any final agreement with Superior will result in these agreements being fully honored and preserved,” the letter said.
The letter is signed by Hawker Beechcraft CEO Steve Miller, and Hawker Beechcraft chairman Bill Boisture.
“The restructuring process requires us to make difficult decisions, taking into careful consideration the requirements placed on us by our lenders and a challenging market for our products and the industry in general,” Miller and Boisture said in the letter. “After careful analysis and very careful consideration, we determined that this agreement is critical to preserving as many jobs as possible and emerging from this process in the strongest operational and financial position.”