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Wed, Jul 31, 2002

TWA Pension Mess: Pilots Say Carl Ichan Did It

Class Action Suit Filed by Former TWA Pilots

Conspiracy, violations of federal law and denial of constitutional rights are the core accusations made in a class action lawsuit regarding the pension benefits denied to former TWA pilots by financier Carl Icahn, the Pension Benefit Guaranty Corporation (PBGC) and the Airline Pilots Association (ALPA).

The lawsuit was filed on May 15, 2002 in the U.S. District Court for the District of Columbia by Quarles & Brady Streich Lang, LLP, representing the more than 1,000 TWA pilots who are now receiving pensions as much as $1,500 per month lower than what they had been promised.

"Carl Icahn and the other defendants robbed us coming and going," said Devon "Al" Francis, president of the plaintiff's group dubbed the "A Plan Defense Fund, Inc." and named after TWA's "A Plan" retirement program for pilots. "Icahn acquired the company with the help of the TWA employees. He couldn't have done it without us. He promised to help us transform the company into the world's 'Premier Airline' and we agreed to drastically reduce our wages and benefits in consideration of receiving stock equity in the company and job security items including enhanced retirement benefits."

These were hollow promises, Francis explained. The pilots lost their Employee Stock Ownership Plan (ESOP) when Icahn's stewardship failed and he filed for bankruptcy. "He, on the other hand, reputedly walked away with over one billion dollars in profits," said Francis. "Later, when faced with having to fully fund the retirement plans, he made a deal with the unions and the PBGC to gut the plans without even asking for our input or opinions."

The multiple page complaint, available at a special website (below), along with other information on the case, details how Icahn played a shell game by transferring TWA's pension programs to a newly created entity, Pichin Corporation. Then, in January 2001, Icahn instigated termination of the pension plans which, at that time, were underfunded by approximately $700 million, including an estimated $200 million shortfall in the pilot's A-plan.

"The termination violated multiple provisions of ERISA, the Employee Retirement Security Act," said Richard Walker of Quarles & Brady Streich Lang.

Additionally, Walker explained, his clients' constitutional rights were violated because they were not provided with any sort of court or administrative proceeding at which they could express their viewpoint about Icahn's decisions.

Icahn's actions required the approval of both the PBGC and ALPA, which is why they are also defendants in the case.

"We know that any logical person would ask, 'why would PBGC and ALPA go along with Mr. Icahn's scheme?' We think that that's a very good question, and we expect the truth to come out in legal proceedings about the behind-the-scenes dealings that sacrificed the pilots' pensions benefits on the altar of greed," said Francis.

FMI: www.aplandefense.org, www.alpa.org, www.amrcorp.com; Icahn bio

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