Pension Benefit Guaranty Corporation 

Protecting America's Pensions 1200 K Street, N.W., Washington, D.C. 20005-4026 

Dear 

June 30, 2008 

Re:Case # 199334, Retirement 

Income Plan for Pilots of US Airways Inc. 

(the IIUS Airways Plan") 

We are responding to your appeal of PBGC's April 25, 2006 

determination of your PBGC benefit under the us Airways Plan. For 

the reasons stated below, we granted your appeal and determined 

that PBGC shall increase your benefit to $3,688.76 per month in the 

form of a Joint and 66 %% Survivor (\IJ & 66%%S") annuity. 

PBGC1s Determinations and Your Appeal 

PBGC's determination letter stated that you are entitled to a 

monthly benefit of $2,080.40 payable as a J & 662h%S annuity. The 

letter noted that this is the same amount you received from the us 

Airways Plan's "former Plan Administrator" and also is the same 

amount you currently are receiving. 

Your April 28, 2006 appeal states that you "received a full 

disabili ty retirement commencing on July 1996, 'I which is based 

on a collective bargaining agreement that provided for Disability 

Retirement benefits. You claim that PBGC/ s determination is in 

error because, based on the terms of a "Confidential Settlement 

Agreement II ("Settlement") signed by US Airways, Inc. ("US Airways" 

or "Companyfl) I you are entitled to a monthly retirement benefit of 

$4 / 515.00 (before adjustment for the J & 660/3%S benefit form). 

You included with your appeal a copy of the Settlement 

(Enclosure 1 to this decision), which" was signed by you and your 

wife and by representatives of US Airways, Shuttle, Inc., and the 

Air Line Pilots Association ("ALPA") during the period between 

October 30 and November 9, 1998. Your letter quotes the following 

language in paragraph 4(b) of the Settlement: 
(b) Commencing on, and retroactive to, July 1996 

(hereinafter the "Disability Retirement Date), 

shall be deemed to have become permanently 

disabled and placed on disability retirement, and shall 

be classified as such on the records of Shuttle. As a 

pilot on disability status, shall be 

eligible to receive monthly payments in the amount of 

Four Thousand Five Hundred Fifteen Dollars and No Cents 

($4,515.00), in accordance with the terms and conditions 

of the Shuttle, Inc. Fixed Benefit Retirement Income Plan 

for Pilots (hereinafter the "Disability Retirement 

Plan"), as such plan may be amended from time to time; 

provided, however, that any such disability retirement 

payments may be made either from the Disability 

Retirement plan or from Shuttle's general assets, or from 

a combination of the two in the sale discretion of 

Shuttle; 

You also assert that, up to March 31, 2003, you were receiving 

benefit payments totaling $3,688.76 per month from two sources: (1) 

$2,080.40 from State Street Bank as the US Airways Plan's 

"Trustee;" and (2) $1,608.36 from US Airways. You contend that, 

since US Airways has not made any payments to you after March 31, 

2003, PBGC should increase your benefits with respect to the US 

Airways Plan to $3,688.76. Specifically, you state: 

The decision of the PBGC is erroneous because it failed 

to account for or even consider the option granted in the 

confidential agreement to allow the employer the option 

to provide payments from the Disability Retirement Plan 

or "from Shuttle's general assets". As a consequence, 

PBGC erroneously concluded that the amount of $2,080.40 

received from the "plan administrator" was the correct 

amount. Because Shuttle exercised the option to pay my 

retirement account from general assets initially an 

additional $2,434.60 each month, that amount could have 

been paid from the Disability Retirement Plan 

Administrator and should have been considered by the 

Board in its determination of the correct amount of my 

retirement benefits from the Administrator. 

Background 

PBGC records show that you were hired as an Eastern Airlines, 

Inc. (HEastern!l) pilot on 1971. While you were employed 

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by Eastern, you accrued a benefit under the Eastern Airlines Fixed 

Benefit Retirement Income Plan for Pilots ("Eastern Plan"). The 

underfunded Eastern Plan subsequently terminated as of October 5, 

1990, and PBGC became its trustee. PBGC determined that your 

monthly accrued normal retirement benefit under the Eastern Plan 

(i.e., the amount before the adjustment for early benefit 

commencement and benefit form) is $1,530.51. 

Effective June 7, 1989, Trump Shuttle, Inc. ("Trump") 

purchased the Eastern Shuttle. Under the terms of the Shuttle 

Purchase and Sale Agreement, Trump was required to offer employment 

to certain Eastern Employees. You accepted employment with Trump, 

and, as a result, you became a participant under Trump's "Shuttle 

plan," which was established effective June 7, 1989. 1 

Trump in 1992 merged into a new company, known as Shuttle, 

Inc. ("Shuttle"). The US Airways group then purchased Shuttle 

from a consortium of banks in 1998, which resulted in US Airways 

becoming responsible for the Shuttle Plan. Also , effective 

February 1, 2000, the Shuttle Plan was merged into the US Airways 

Plan. 

The US Airways Plan terminated effective March 31, 2003 

without sufficient assets to provide all benefits PBGC guarantees 

under the Employee Retirement Income Security Act (ERISA), and PBGC 

became trustee. As trustee, PBGC became responsible for all 

benefits under the US Airways Plan, which included the benefits 

under the former "Shuttle, Inc. Fixed Benefit Retirement Income 

plan for Pilots" that is referenced in the Settlement. 2 

As you state in your appeal, the Settlement provides that your 

Disability Retirement Date is 1996. We further note that 

there is no evidence in PBGC records that you returned to active 

employment with Shuttle, Inc. or US Airways after that date. After 

the Settlement became effective, US Airways paid you $4,515.00 per 

The Shuttle Pilots Plan originally was known as the "Trump Shuttle, 

Inc. Fixed Benefit Retirement Income Plan for pilots." Later, it was renamed 

as the "Shuttle, Inc. Fixed Benefit Retirement Income Plan -for pilots." 

Although the Settlement also uses the term "Disability Retirement 

Plan," it is clear from its section 4(b) that the term "Disability Retirement 

Plan" means the-"Shuttle, Inc. Fixed Benefit Retirement Income plan for 

Pilots." 

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month for the period between July 3, 1996 and November 11 2001, 

with the payments made exclusively from the Company's funds. 3 

On October 2001, you elected to receive your retirement 

benefits in the form of a J & 66%%8 annuity. At that time, US 

Airways had informed you that your total monthly amount for this 

form of benefit is $3,688.76. See Enclosure 2, which are copies of 

certain documents that the Appeals Board obtained from US Airways. 

Starting in December 2001 1 you received monthly payments totaling 

$3,688.76 divided between $2[080.40 from the US Airways Plan and 

$1,608.36 from US Airways's own funds. 

As noted above, your appeal. states that you continued to 

receive payments from these two sources until March 2003, when the 

US Airways Plan terminated. We note in this regard that, in June 

23, 2003, US Airways's bankruptcy counsel prepared a document to 

inform you of US Airways' view that (based on bankruptcy law) US 

Airways has no continuing obligation to you under the Settlement. 

See Enclosure 3 (unsigned copy of bankruptcy counsel's letter). 

Discussion 

When it issued the determination letter, PBGC took the 

position that PBGC/s benefit obligation to you with respect to the 

US Airways Plan is limited to the $2 / 080.40 monthly amount that you 

were receiving when that Plan terminated. PBGC further viewed the 

remaining monthly amount of $1,608.36 as an obligation to be 

satisfied solely from US Airways' corporate assets. 

The Appeals Board decided, based on the Settlement and the 

terms of the Shuttle Plan, that the entire $4[515.00 amount (before 

the reduction for the benefit form you elected) is a benefit 

obligation under the terminated US Airways Plan. The Board reached 

this conclusion for the following reasons: 

• The Settlement states that has provided to 

Shuttle appropriate medical documentation establishing his 

permanent disability" and that Shuttle agrees to not require 

any further proof of disability. It also says that 

In 1999, US Airways made payments to you that were substantially 

above $4,515.00 per month. To correct this error, US Airways and you agreed 

that benefit payments to you would be suspended until the amount of the 

overpayments was repaid. Since under this agreement you had repaid the 1999 

overpayment amounts before the US Airways plan terminated, the overpayments do 

not affect the amount of your PBGC benefits. 

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shall be deemed to have become permanently disabled 

and placed on disability retirement. If Accordingly, the 

Settlement provides that the necessary proof of disability 

under the Shuttle Plan's disability retirement provisions was 

satisfiedi 

• The Settlement further provides that shall be 

eligible to receive monthly payments in the amount of . 

$4,515.00, in accordance with the terms and conditions of the 

[Shuttle Plan]." Since section 4(b) of the Settlement does 

not reference either a US Airways corporate obligation or the 

obligations of any other employee benefit plan, the 

Settlement \ s language suggests that the Shuttle Plan's benefit 

obligation is for the entire $4,515.00;4 

• Plainly read l the Settlement l s provision that "disability 

retirement payments may be made either from the Disability 

Retirement Plan or from Shuttle/s general assetslf applies to 

the source of benefit payments, rather than to the amount of 

the obligation. Additionally, the Appeals Board never was 

able to determine the rationale for US Airways' decision to 

pay $1,608.36 per month from its own corporate assets during 

the period between December 2001 and March 2003, rather than 

to pay the full amount under the Settlement from the US 

Airways Plan's funds. The Appeals Board further was unable to 

conclude, based on the US Airways Plan's terms, applicable 

law, and available information, that your monthly disability 

retirement payments under that Plan must be limited to less 

than the $4,515.00 Settlement amount; and 

• As is discussed in detail below, the Appeals Board reviewed 

your personal data and the provisions of the US Airways and 

Shuttle Plan. The Board was unable to determine, precisely, 

whether the $4,515.00 amount in the Settlement is your correct 

disability retirement benefit amount. The Appeals Board 

nevertheless concluded, based on available information and the 

terms of the Shuttle Plan, that the settled $4,515.00 

disability retirement benefit amount was reasonable. 

Accordingly, the Board decided that the $4,515.00 amount in 

the Settlement should not be changed. 

4 Although the Settlement provided for adjustments to your benefits 

based upon your Worker's Compensation payments or if you were re-employed, 

neither of those qualifying conditions applied to you on or after the US 

Airways Plan's termination date. 

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Section 4.3 of the Shuttle Plan document provides that a 

disabled pilot is entitled to the greatest benefit payable under 

the five benefit formulas that are referenced in that section. In 

your case, the greatest benefit is under the formula in section 

4.3(a) (v), which provides in pertinent part that the benefit equals 

"thirty percent times the Disability Benefit Earnings Base of such 

participant, plus two and one-half percent times the Disability 

Benefit Earnings Base of such Participant times the number of 

Active Service of such Participant that exceeds two years of Active 

Service. ,,5 Section 1.12 of the Shuttle Plan defines "Disability 

Benefit Earnings Base" as the amount of the twelve consecutive 

months of highest compensation of a Participant during the last 36 

months of Active Service. 

As is shown in Enclosure 2, US Airways determined that your 

monthly Disability Benefit Earnings Base is $11,958.72 and your 

Active Service as a Shuttle employee is 7.00556 years. Thus, under 

section 4.3(a) (v), your monthly benefit (before any offsets) using 

those US Airways-determined amounts is $5,084.12 [(30% x 

$11,958.72 Disability Earnings Base ) + (.025 x 5.00556 Active 

Service greater than 2 years x $11,958.72) = $5,084.12].6 

The $4,515.00 monthly amount stated in the Settlement thus is 

$569.12 less than the amount calculated above. The difference 

between the two amounts appears to reflect the deduction for 

"pension offsets" that is set forth in Section 4.7 of the Shuttle 

Plan. That section provides that the benefit calculated under 

section 4.3 (a) (v) is offset for other pension amounts I which 

include the annuity value of your account balance under the 

Shuttle, Inc. Self -Directed Pension Plan for Pilots ("Self -Directed 

Plan") . 

Section 4.3(a) (v) also limits the benefit payable to 50% of the 

participant's Disability Benefit Earnings Base. In your case, your benefit 

amount was less than this 50% cap. 

Your Active Service as a Shuttle pilot is based on the service your 

earned between the .June 7, 1989 sale date of the Eastern Shuttle and your 

1996 employment termination date. The full elapsed time between those 

dates, in completed months, is 7 years and one month (i.e., 7.0833 years), 

rather than the 7.00556 years shown in Enclosure 2. If the 7.0833 Active 

Service amount is used, your monthly amount under Plan section 4.3(a) (v) is 

$5,107.36. 

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The Appeals Board was unable to locate any record of your 

balance under the Self-Directed Plan, nor did you provide such 

information with your appeal. We examined, however, the US Airways 

benefit calculations for other disabled Shuttle pilots and 

concluded that an offset of $569.12 per month based on your SelfDirected Plan balance would be comparable to the benefit offset 

amounts for these other pilots. 7 

Because of legal limits under ERISA and PBGC's regulations, 

the benefits PBGC guarantees may be less than the benefits a 

pension plan would otherwise pay. In your case r however, PBGC is 

able to pay you the full amount of your US Airways Plan benefit 

based upon ERISA's requirements for the allocation of pension plan 

assets under ERISA section 4044. That section establishes a 

six-tier asset allocation scheme under which the first two priority 

categories involve benefits based on employee contributions. 

Priority is next assigned to benefits that were "in pay status" 

(i. e. I were being paid) three or more years before the plan's 

termination date, or that would have been in pay status three years 

before termination if the participant had retired ("PC3 

Benefits") .8 

Since the benefit amount established under the Settlement is 

based on a Disability Retirement Date of 1996 (which is 

more than three years before the US Airways Plan's termination 

date), the full amount provided under the Settlement is a PC3 

Benefit. Additionally, since the US Airways Plan's assets at its 

termination date covered 100% of PC3 Benefits, you are entitled to 

receive the entire amount. 

In the case of these other disabled Shuttle pilots, the only pension 

amount that is deducted from the benefit calculation under Plan section 

4.3(a) (v) is for the Self-Directed Plan balance. 

The PC3 benefit further is limited to the amount "based on the 

provisions of the plan (as in effect during the 5-year period ending on such 

date) under which such benefit would be the least." This 5-year limit, 

however, does not affect the amount of your PC3 benefit. 

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Decision 

For the reasons stated above, we granted your appeal and 

determined that PBGC shall increase your benefit to $3,688.76 per 

month in the form of a Joint and 66 0/3% Survivor .annuity.9 Since 

this increase applies to PBGC benefits that were payable to you 

following the March 31, 2003 plan termination date, you are also 

entitled to a backpayment from PBGC that includes interest. 

Your determination was in-part based on information contained 

the confidential settlement agreement you provided to PBGC. We 

have limited access to that information while finalizing your 

determination and want to assure you that access to your 

information in the possession of the PBGC is restricted by both the 

provisions of the Privacy Act of 1974 (as amended) and PBGC's 

implementing regulations. 

This is the Agency's final decision on this matter. If you 

need other information from PBGC, please call the Customer Contact 

Center at 1-800-400-7242. 

Sincerely, 

UJuufn w.~ Charles W. Vernon 

Appeals Board Chair 

Enclosures (3) 

The $3,688.76 amount is based on your representation that US Airways 

in March 2003 stopped all payments to you under paragraph 4(b) of your 1998 

Settlement and the assumption that US Airways will not resume monthly payments 

on a future date. If you had or will receive such payments from US Airways, 

PBGC may reduce your benefit payments so that your total benefits do not 

exceed $3,688.76 per month. 

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