FEDERAL JUDGE RULES IN FAVOR OF PBGC IN US AIR PENSION DISPUTE.

The Pension Benefit Guaranty Corp. is entitled to recover up to $2.1 billion from US Airways rather than the $890 million the airline claimed for the value of the pilot pension plan, which was taken over by PBGC after the airlines terminated it in 2003, a federal bankruptcy judge ruled Dec. 29.

PBGC Executive Director Steven Kandarian said he expects PBGC "to recover pennies on the dollar," about $200 million of the $2.1 billion claim, because the airline is under Chapter 11 bankruptcy protection.

But Kandarian called the Dec. 29 ruling by U.S. Bankruptcy Court Judge Stephen S. Mitchell a victory because "it upholds the commonsense view that it should not be cheaper to terminate a pension plan with the PBGC than with a private insurance company."

He said the ruling was also significant because it confirmed PBGC, a quasi-government agency created by the Employee Retirement Income Security Act to guarantee payment of basic pension benefits, was to have its claim governed by ERISA, not bankruptcy law.