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Union To Vote On Bankrupt Hawker's Pension Proposal

Posted on in Bankruptcy

Reuters reported a story about a vote regarding a pension plan of bankrupt U.S. aircraft maker Hawker Beechcraft. The vote will be on a plan to prevent termination of an existing plan worth $195.3 million in pensions that Hawker is liable for paying.

Hawker is negotiating with China's Superior Aviation Beijing Co on their plans to buy the company for $1.79 billion.

The International Association of Machinists and Aerospace Workers (IAM) is telling its members at Hawker to support the proposed contract change, which would preserve the existing plan, effective December 31. IAM represents around 3,500 workers at Hawker. The union said the company would add a deferred contribution retirement component to its existing 401-K retirement plan afterwards.

The union said Hawker's proposal called for it to honor the provisions of the existing plan and the benefits and early retirement options it included. Wage rates, work rules and health care coverage would follow the current agreement and remain unchanged.

Ron Eldridge, an IAM aerospace coordinator, said that the latest proposal represents a significant improvement over earlier proposals that would have completely terminated the defined benefit pension plan. The contract change will still require approval by the bankruptcy judge, even if the union members ratify it.

The sale would pre-empt a massive debt restructuring for Hawker. Hawker is seeking to exit Chapter 11 bankruptcy protection which it entered after failing to support a $2.5 billion debt load. The machinists group remained concerned about losing a number of jobs if the company is taken over by the Chinese company, says a union spokesman.

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