American Airlines Group Inc. gave in to pressure from employees and adopted a profit-sharing program, acknowledging the issue was thwarting efforts to improve labor relations and the carrier’s performance, Bloomberg News reported yesterday. American joins the other large U.S. carriers — Delta Air Lines Inc., United Continental Holdings and Southwest Airlines Co. — in splitting some earnings with employees. Starting this year, 5 percent of pretax income, excluding one-time items, will go into the profit-sharing fund, Chief Executive Officer Doug Parker and President Scott Kirby told workers yesterday. The first payout will be in early 2017.
Appalachian coal communities hit hard by layoffs will get $45 million in federal funding to help them diversify their economies, create new jobs and retrain workers, The Associated Press reported yesterday. The Appalachian Regional Commission, the White House and the U.S. Department of Commerce announced Thursday that it’s part of a $65.8 million grant package through the Obama administration’s Partnership for Opportunity and Workforce and Economic Revitalization initiative (POWER). While grants will support economic development efforts among regional partnerships in coal communities nationwide, the Appalachian Regional Commission will receive $45 million to distribute for such projects. The partnerships must develop projects to diversify economies, create jobs in new or existing industries, attract new job-creating investment and provide workforce services and skills training. The announcement comes amid the Environmental Protection Agency’s plan to reduce the nation’s carbon-dioxide emissions 32 percent by 2030, viewed as a possible knockout blow to a staggering coal industry that has seen thousands of layoffs in recent years.
A federal agency is picking up the pension plans of more than 21,000 retirees of the defunct A&P supermarket chain, The Journal News reported today. However, the U.S. Pension Benefit Guaranty Corp. said that pension plans that cover most of the retirees from the company's shuttered Lower Hudson Valley stores will not have to be bailed out. The 150-year-old A&P supermarket chain filed for bankruptcy last year, the company's second chapter 11 filing in five years. The store sales raised more than $900 million to pay off loans and debt, but the sales also left a shortfall in A&P's pension benefits because many of the buyers did not agree to take over the pension plans. For instance, three of the companies' pension plans, which cover more than 21,000 A&P retirees, were left underfunded by a combined $291 million. That includes retirees who were in the Pathmark Stores Inc. Pension Plan.
Billionaire Ira Rennert's Renco Group has agreed to restore the pensions of 1,350 retirees from RG Steel, which liquidated in bankruptcy about a year after it was formed, Dow Jones Daily Bankruptcy Review reported today. The agreement grew out of a court fight with the Pension Benefit Guaranty Corp., which took over RG Steel's pension obligations when RG Steel filed for bankruptcy in 2012. According to the PBGC, the U.S. government's pension insurer, Renco raced to sell down its stake in the failing steel operation to evade being held responsible for RG Steel's obligations to retirees. Without admitting wrongdoing, Renco said that it would take back the pension plans for plants in Wheeling, W.Va., and Warren, Ohio, as well as make good on back payments for benefits not covered by the PBGC.
Lynn Tilton's Patriarch Partners LLC has been sued over last week's abrupt firing of roughly 1,200 workers at TransCare Corp, shortly after the privately held ambulance company filed for bankruptcy protection, Reuters reported yesterday. TransCare workers accused Patriarch, whose portfolio included the Brooklyn-based company, of failing to provide 60 days notice before terminating them without cause, violating federal and state employment laws known as the WARN Act. Three lawsuits filed in various New York City federal courts seek to recoup up to 60 days wages and benefits, plus unpaid wages for work performed prior to TransCare's bankruptcy. One of the lawsuits also names TransCare as a defendant.
Retired Bankruptcy Judge Steven Rhodes says that there is no alternative plan for addressing the debt crisis in Detroit Public Schools, and lawmakers need to act soon to provide the additional cash the district needs to reorganize and pay its debts — a necessity given the district is expected to run out of money this spring, the Detroit Free Press reported today. Judge Rhodes, whom Gov. Rick Snyder officially announced yesterday as the new transition leader for the district, said that pushing for the passage of legislation is a key priority. Also on his list: hiring a superintendent who will oversee academics. Rhodes said that it would be ideal — but he's not sure whether it's necessary — for that person to have an education background. He said he hopes to make the decision by as early as next week.
Republic Airways Holdings Inc. doesn’t plan to cut aviators’ jobs or seek to throw out their four-month-old contract in bankruptcy court, according to the pilots union, Bloomberg News reported on Friday. A potential bankruptcy filing had been part of monthly discussions between leaders of Republic’s pilots union and airline executives, the International Brotherhood of Teamsters Local 357 executive board told members in a message on its website Friday. The posting came a day after Republic, which provides regional flights for American, Delta and United airlines, sought chapter 11 protection from creditors.
Mayor Bill de Blasio wants to create a way for New York City’s estimated 1.4 million private-sector workers who do not have employer-sponsored retirement plans to set aside money in a city-organized retirement savings program, the New York Times reported today. The city’s effort follows a wave of such proposals that have been passed or are being considered in statehouses across the country, including in California, Illinois and Oregon. The movement received a significant push from President Obama last year when he ordered the Labor Department to revise its regulations to help to allow such state-based accounts. Those rules are expected to be made final this year.
Illinois’s quest to take over Chicago’s schools intensified as Governor Bruce Rauner said the state can block the district from borrowing in the municipal-bond market, a claim the nation’s third-largest school system rejects, Bloomberg News reported yesterday. The Illinois State Board of Education is investigating the finances of the district, which is facing projected deficits of $1 billion a year through 2020, and the Republican governor is pushing for legislation to strip the city of its control. The system has routinely relied on bond sales to help cover operating costs and push debt payments further off into the future. “If it determined that any school district was in financial duress, the state board has the right — the legal authority — to block any debt offerings,” Rauner said on Monday. “The state board has not ever chosen to do that for the city of Chicago. I hope that never becomes necessary, but we’ve got to be ready to take action and step in.” The Chicago Board of Education is struggling to avert insolvency after years of borrowing, drawing on its reserves and shortchanging the workers’ pension fund, which is causing its annual retirement payment to soar. With a junk credit rating, the board sold $725 million of bonds this month for yields as high as 8.5 percent, more than twice that demanded from most credit-worthy state and local governments.
