Hawker Beechcraft has reached an agreement with the Pension Benefit Guaranty Corp. to take over two underfunded pension plans covering existing non-union and already-retired employees. Under the deal, the company, which hopes to exit bankruptcy protection in the next few months, will continue to fund the pension plan for its current and former unionized employees. As part of the deal, the International Association of Machinist and Aerospace Workers agreed to allow the company to freeze the pension plan but details of the freeze were not immediately released. The deal will have to be approved by the bankruptcy court and is scheduled to be considered Jan. 17.
The pension hurdle was considered a major part of the company's bankruptcy exit plan. The group of hedge funds that will take control of the planemaker had originally demanded that Hawker Beechcraft dump all of its pension plans but agreed to compromise on the deal for the core workforce. The hedge funds are essentially buying Hawker Beechcraft's almost $1 billion in debt in exchange for control of the reorganized and much less burdened company. As part of the reorganization, Hawker Beechcraft is dropping its entire line of business jets to focus on its military and turboprop business. It is also considering launching new designs, including a turboprop single.