The number of full-time equivalent jobs at American Airlines Inc. shrank 7.4 percent, from 66,357 in November 2011 to 61,457 in November 2012, after the carrier’s first year in bankruptcy, the Dallas Morning News reported today. American and parent AMR filed for bankruptcy protection on Nov. 29, 2011. When American outlined potential job cuts through the airline in February 2012, the potential layoffs exceeded 14,000. That number has been whittled down through contract negotiations and revised planning, and the final count will not be known until after the case concludes. If there is a merger with US Airways, the number of job cuts caused by the bankruptcy filing could become even more obscured.
Patriot Coal Corp. wants to limit its obligation to pay retiree health benefits to thousands of U.S. mine workers and their families as part of its plan to survive chapter 11 bankruptcy, Reuters reported yesterday. The company has proposed creating a trust, known as a voluntary employees' beneficiary association, to provide a maximum of $40 million annually up to a limit of $200 million. The annual cost of providing retiree health benefits in 2012 was $71 million and is expected to rise to $73.8 million, nearly twice as much as Patriot has proposed to spend, according to the documents.
The U.S. Pension Benefit Guaranty Corp. (PBGC) has sued Renco Group Inc for $97 million, accusing it of trying to avoid the pension obligations of bankrupt steelmaker RG Steel LLC, Reuters reported today. Renco Group, founded by New York billionaire Ira Rennert, had a controlling interest in RG Steel, which had sponsored two pension plans for about 1,350 people. Last year, Renco sold 24.5 percent of its ownership stake in RG Steel to an affiliate of the New York-based investment firm Cerberus Capital Management before the steelmaker filed for chapter 11 protection. The PBGC said in the court filing that Renco had reduced its ownership stake in an attempt to free itself from RG Steel's pension obligations. It said in the filing that ownership of 80 percent or more in RG Steel would have made Renco responsible for the steelmaker's pension plans.
The Transport Workers Union of America, which represents ground workers at American Airlines, said yesterday that it has reached an agreement with US Airways Group Inc. and AMR Corp. that would grant immediate raises of 4.3 percent for its members should a merger of the two carriers take place, Reuters reported yesterday. The wage increase is spelled out in a memorandum of understanding reached over the past month with representatives of senior management at US Airways and American Airlines. The memo requires bankruptcy court approval and would take effect should the court approve a merger reorganization plan for American, which sought chapter 11 protection in November 2011.
Hostess Brands Inc., the bankrupt maker of Twinkies and Wonder Bread, asked a judge to set March 21 as the cutoff date for workers to file back-pay claims and said that it has no obligation to bargain with its former unions, Bloomberg News reported yesterday. Hostess, previously subject to 372 collective-bargaining agreements, said in court papers filed yesterday that it now has “no continuing duty to bargain with” unions objecting to sale procedures. The company said its staff has been reduced to 255 people, including 20 union members.
Numerous pension funds are still struggling to make up investment losses from the financial crisis, but rather than reduce risks in the wake of those declines, many are getting aggressive, the Wall Street Journal reported today. They are loading up on private equity and other nontraditional investments that promise high, steady returns in the face of low interest rates and a volatile stock market. The $114 billion Texas pension fund has hit the trend particularly hard. It now boasts some of the splashiest bets in the industry, having committed about $30 billion to private equity, real estate and other so-called alternatives since early 2008. That makes it the biggest such investor among the 10 largest U.S. public pensions, according to data provider Preqin Ltd. Those funds have an average alternatives allocation of 21 percent.
Nortel Networks Inc., which filed for bankruptcy in 2009, has reached a settlement with a committee representing its long-term disabled employees over a plan to end disability benefits, according to court documents, Reuters reported yesterday. Nortel, once the largest telecommunication equipment company in North America, said that it will not terminate any of the existing long-term disability benefits for its former employees on or before May 31, unless the company grants the committee a general unsecured claim of $28 million. If the company were to grant the committee an unsecured claim, the proceeds of the claim, minus the administrative costs, would be allocated among the disabled employees and would free Nortel from any further liability. The company has asked only for an initial approval of the settlement agreement with an opportunity for the employees to object to the settlement, according to documents filed on Friday. The initial hearing regarding the approval is expected to take place on Feb. 14. Read more: http://www.reuters.com/article/2013/01/22/nortel-bankruptcy-mediation-i…
In related news, a mediator overseeing creditor negotiations in Nortel Networks' bankruptcy said yesterday that he is extending talks over how to distribute about $9 billion in cash at the fallen telecom, Reuters reported. Ontario Chief Justice Warren Winkler said in a statement that the mediation, scheduled to end yesterday, had been extended, but did not say for how long. Read more: http://www.reuters.com/article/2013/01/23/nortel-mediation-idUSL1N0ARBA…
Bankruptcy Judge Stuart Bernstein reserved judgment on Thursday in a hearing regarding the future of Hawker Beechcraft’s three pension plans, the Wichita Eagle reported on Friday. A settlement has been reached with an ad hoc retiree committee of salaried employees, the company said. The small group opposed the Pension Benefit Guaranty Corp.’s takeover of its plan, saying their benefits would be substantially reduced if the judge approved the takeover. The ad hoc committee is made up of nine or 10 retirees, but the settlement covers about 70 former salaried employees whose benefits would be reduced under PBGC caps, the company said. Other groups of retirees’ monthly benefits would not be reduced by the change because their benefits fall below the caps.
The union and pension fund for Hostess Brands Inc. has hired Gordian Group to help preserve jobs and workers' benefits at the bankrupt maker of Twinkies snack cakes as Hostess negotiates with buyers, Reuters reported on Sunday. New York-based Gordian, which has no institutional loyalties to funds or bondholders in Hostess, will provide conflict-free advice for the welfare of the company's workers, The Bakery and Confectionery Union and Industry International Pension Fund (Bakers Fund) said. Mexico's Grupo Bimbo and a partnership between Apollo Global Management and veteran food executive C. Dean Metropoulos are among the leading candidates to buy Hostess Brands Inc's snack cake brands. In a separate announcement earlier this month, Hostess said Flowers Foods agreed to pay $390 million for Hostess's Wonder and other bread brands, including Nature's Pride and Butternut. That sale is still subject to a court-supervised auction.
The California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold, Bloomberg News reported today. The largest U.S. public pension, with half of its money in publicly traded equities, was worth $253.2 billion on Jan. 17, or about 97 percent of the pre-recession high set in October 2007. The fund returned 13 percent in 2012, about the same gain as the Standard & Poor’s 500-stock index achieved. The 100 largest public pensions in the U.S. had $2.9 trillion in assets in the fourth quarter of 2007, according to U.S. Census Bureau data. That dropped to $2 trillion in 2009 and rebounded to almost $2.8 trillion as of Sept. 30.
