WASHINGTON (Reuters) - Union workers at bankrupt aircraft maker Hawker Beechcraft will vote on Friday on a plan that will prevent termination of an existing defined benefit pension plan, with Hawker to fund $195.3 million in unfunded liabilities for those pensions.
Hawker Beechcraft, which is owned Goldman Sachs and Onex Corp is in exclusive talks with China's Superior Aviation Beijing Co on its plans to buy the U.S. company for $1.79 billion.
The International Association of Machinists and Aerospace Workers (IAM), which represents 3,500 workers at Hawker, is urging members to support the proposed contract change, which would preserve and freeze the existing plan, effective December 31.
After that the company would add a deferred contribution retirement component to its existing 401-K retirement plan, the union said in a statement.
It said Hawker's proposal called for it to honor the provisions of the existing plan, including early retirement options and scheduled benefit increases.
The remainder of the company's current collective bargaining agreement with the union, including wage rates, work rules and health care coverage would remain unchanged.
"The latest proposal represents a significant improvement over earlier proposals that included complete termination of the defined benefit pension plan," said IAM Aerospace Coordinator Ron Eldridge. "Preserving a defined benefit pension plan at a company in the midst of bankruptcy reorganization is the best possible outcome under extremely difficult circumstances."
If ratified members, the contract change would still require approval the bankruptcy judge. Voting is scheduled for Friday after a meeting to discuss the changes.
The sale of the Witchita-based aircraft maker to the Chinese firm would pre-empt a full-blown debt restructuring.
Hawker is seeking to exit Chapter 11 bankruptcy protection which it entered in May when it was unable to support a $2.5 billion debt load.
Union spokesman Frank Larkin said the machinists group remained concerned about the possible loss of jobs and technologies if the takeover the Chinese company proceeds.
(Reporting Andrea Shalal-Esa; Editing Tim Dobbyn)