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I recall that the assumed interest rate of our plan had been increased from 7.5 to 9.0 per cent for about six years and when the PBGC took over the assumed interest rate used in their valuation was 7.5 per cent.

When the TAL/CAL agreement to fund EAL pensions at 100% was torpedoed by the second CAL bankruptcy, the PBGC pursued their claims in court. As a result, they received some cash and the assignment from TAC of the income stream from the leases of a number of aircraft. When these payments are reduced to a net present value, the pilots share amounts to $17.6 million (shown as 4022 recoveries on SCHEDULE A). This reduces our shortage and increases our plan funded level to 81.5%.

The PBGC began sending out IDLs in early 1996 based on this 81.5% funding. shortly thereafter ALPA Retirement and Insurance, the EAL MEC Trustee, and the U.S. Air Shuttle R&I Chairman responded to pilot complaints and began the process of reviewing what PBGC had done. They were joined by REPA in November, the Eastern Airlines Disabled Pilots, Inc. (represented by Connerton & Ray, a Washington, DC law firm) in January, and the struggle begins. This process consumed hundreds of man hours and tens of thousands of dollars and has resulted in a negotiated settlement worth $14.4 million that increases our funded level to 84.7%.

The IDL's sent out last year were calculated on a 19.556% PC-5 funding level, so even if you had taken a previous cut you were looking at a further cut and additional recoupment charges. The settlement provides that benefits will be recalculated based on a PC-5 funding level of 34 per cent. This will increase monthly benefits for all pilots with PC-5 claims thereby reducing over-payments and recoupment charges.

This could not have been accomplished without the combined efforts put forth by the ALPA team of Trustee Capt. Francis Kelker, Field Representative Steve Hodgson, Actuary V. Bems and Capt. Pete Mcguirk of the Shuttle, as well as the EADP Representatives and their legal team.

Respectfully submitted,
Vic Calay
Vic Calay, Chairman