The US Air Line Pilots Association (ALPA) has joined major airlines in calling for radical change to pilots' pension plans, but the two sides will likely disagree on an ALPA condition that airlines must first honour current retirement obligations.

The pilots union says it is "extremely concerned about the future of defined-benefit pension plans". Such plans account for $48 billion in total liabilities for the six major US airlines, of which only about $20.5 billion is funded.

Any reform will be aimed at eliminating or dramatically decreasing the pilots' stakes in defined-benefit pension plans, which now account for about half of an average pilots' retirement plan, says Vaughan Cordle, chief analyst at AirlineForecasts, and a United Airlines (UAL) captain. Instead, he says, most of each employee's retirement fund would be shifted to a defined contribution plan, such as a 401K.

ALPA's concession comes as the majors move toward eliminating the direct pension plans as a cost-saving measure. UAL has stated its intention to default on estimated defined-benefit pension liabilities totaling $8.3 billion as part of a bankruptcy proceeding, although the legality of the move is still under question.

If United succeeds, industry observes expect the other majors to quickly follow suit.



Source: Flight International