Alabama Pension Fund Nets $111M From WorldCom Settlement
As the Alabama state pension fund waits to see what will happen with U.S. Airway's bankruptcy filing, the fund received a $111 million settlement from three companies over claims in the WorldCom collapse, the Associated Press reported.
The Retirement Systems of Alabama achieved majority shareholder status in U.S. Airways when it bought into the company in December 2002 while the airline was previously in bankruptcy. The airline once again filed for bankruptcy protection Sept. 12.
"Would I do it again? Absolutely," said Alabama pension system chief David Bronner. "It had $7.5 billion in revenues and we got controlling interest for $240 million."
While Bronner has said that while a bankruptcy filing by U.S. Airways would cost the pension system up to $240 million, the fund is diversified enough to withstand the loss.
US Airways announced plans last Tuesday to cut $45 million a year in pay and benefits to roughly 3,700 management employees, a move the airline hopes will convince its union employees to collectively accept $950 million in annual cost cuts, the Associated Press reported.
An airline source who briefed reporters Monday on condition of anonymity said the planned cuts will include hundreds of layoffs and shed at least $45 million off the $201 million collective payroll for its management workers, the AP reported.
The influx of cash from this week's settlement will no doubt be welcome to the Alabama pension fund. The settlement resolves the Retirement Systems of Alabama's claims against J-P Morgan Securities, Citigroup Global Markets, Banc of America Securities, and Arthur Andersen, the AP reported.
Bronner called the settlement a huge win for public pension funds and for investors as a whole, the AP reported.