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US Airways Group Inc. struck a deal with its pilots over the weekend, clearing one of the final hurdles to the bankrupt airline’s emergence from Chapter 11 protection by month’s end. The Arlington, Va.-based company reached the agreement Saturday after weeks of talks with pilots on the future of their retirement plan. US Airways earlier this month received approval from bankruptcy court Judge Stephen Mitchell to void the pilot’s pension plan, which was underfunded, as part of its reorganization, but the company was ordered to negotiate a replacement plan with the Air Line Pilots Association. US Airways said last week that talks were at an impasse, but sources close to the union insisted that a deal was within reach. The airline was seeking a plan that would have required it to contribute about $120 million per year, while the pilots proposed a plan they said would cost the carrier about $135 million. Terms of the agreement were not disclosed, pending final approval. US Airways’ effort to abandon the pilots’ existing pension plan must still be approved by the federal Pension Benefit Guaranty Corp., which a source said is likely to happen in the coming days. “ALPA was the hard part,” the source said. “Now that they are on board, the rest is just paperwork.” The source said the pilots negotiation was the company’s last major task in its reorganization. US Airways has said it needs to complete its restructuring soon to qualify for more than $1 billion in government-backed loans and new equity financing after it exits bankruptcy. Passenger bookings have dropped as much as 40 percent since the beginning of the war in Iraq, according to company estimates, and the airline says the funding is necessary to ensure it enough liquidity to continue operations. “With the airline business only getting worse as the Iraqi war heightens public anxiety, it is critical that we complete our reorganization, exit from Chapter 11 and secure the $1.24 billion in new financing that awaits us,” CEO David Siegel said in a statement. Copyright �2003 TDD, LLC. All rights reserved.

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