Skip main content and go to side navigation

This announcement is to address and restate the security of your assets in the Directed Account Plan and the Pilots 401K Plan. You are 100% vested in your account balance. The assets of the plans are not exposed to the financial exercise now taking place in Bankruptcy Court.

For Retirees: This means your account balance is secure and your monthly installment will continue as you have directed without any further action on your part. You will continue to have the same flexibility in accessing your account as you did prior to TWA’s bankruptcy filing.

For Actives and Retirees: The TWA Pilots Directed Account Plan will continue to be governed by a Board of Directors made up of two TWA ALPA MEC assigned pilots, up to three independent directors, and two directors assigned by the Plan sponsor.

The Plans will continue to provide an excellent investment structure with the same options, low cost, easy access, good communications, and with up to date web sites for information and access. This is a plan designed for you to use through your active career and into retirement.

Loans should continue to be paid by payroll deduction or manual payment for retirees. Should that become an administrative problem for active pilots, we will make other arrangements and communicate with you long before any defaults occur.

There are still many questions without answers. As we proceed through the next few months and those answers become apparent, we will communicate with you using every method available to us. Check FIP/53 and visit often. Please read the mailings. We will keep you informed.

In the event of a TWA cessation of operations and/or bankruptcy, could the assets in my DAP account be accessed by the Company?

No. The Directed Account Plan and the 401(k) Plan are both qualified retirement plans subject to the provisions of both the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA). One of the provisions applicable to such qualified plans prohibits any part of the corpus or interest under the plan trust to be “used for or diverted to purposes other than for the exclusive benefit of the employees or their beneficiaries.” As stated in the DAP and 401(k) Plan documents, no part of the Trust fund holding the assets of these plans will be used for or diverted to purposes other than for the exclusive benefit of the plan participants or their beneficiaries. With the exception of the November 2000 DAP company contribution for the reasons explained below, your DAP and 401(k) Plan accounts are 100 percent vested (nonforfeitable) at all times.

TWA Pilots ALPA MEC Chairman’s letter in reference to ongoing contributions

In my December 19 letter to all pilots, I reported that the Company had notified ALPA in December of its intent to defer payment of the Company contribution to the DAP. As there has been some confusion as to what monthly DAP contribution(s) has/have actually been deferred by the Company, the following will provide some clarification on this issue and will provide answers to other questions relating to the DAP and 401(k) Plan.

The Company has actually deferred the payment of the Company contributions to the DAP that were contractually due both on November 1 (based on earnings reported on pilot October 25th paychecks) and on December 1 (based on earnings reported on pilot November 25th paychecks). This may not be readily apparent to DAP participants because the contribution due on November 1 has already been posted to participant DAP accounts, based on the contribution transmittal information that TWA Employee Benefits forwarded to the DAP recordkeeper on November 30. Although the November contribution was posted to the participant accounts, per normal procedure, based on TWA’s data transmittal, the funds transfer from TWA to the Plan Trustee did not take place following that data transmittal, as it normally should have. The Company has deferred payment of those funds, as well as the funds relating to the Company DAP contribution that was due on December 1. The Company DAP contribution that was due on December 1 has not yet been posted to participant accounts, and will not be posted until TWA actually transfers the funds to the Plan Trustee.

Although the Company has not advised us when the deferred payments will be made, it has indicated that when such payments are made by the Company, they will be made with interest, per the terms of the CBA. The CBA requires the DAP contributions to be paid on the first business day of each month, and further requires the Company to pay interest at an annual rate equal to prime plus 3 percent on late payments.

Robert A. Pastore, Chairman


FAQ’s as of 01/05/01

Why has the Company deferred payment of the DAP contributions?

The Company’s deferral of the DAP contributions is one of the steps the Company took to conserve cash during the lower-revenue winter months.

Is this deferral of DAP contribution payments part of some concession package that the MEC has agreed to?


What is ALPA doing about this payment deferral?

On December 15, ALPA filed a grievance concerning the Company’s failure to pay on November 1 and December 1 the DAP contributions, requesting that payment be made immediately with interest as required by Section 23(C)(2) of the CBA and that the Company cease and desist from any future violation.

Is TWA also deferring payment of its contributions to the plans for other TWA employee groups?


Is the Company also delaying the transfer of my contributions to the 401(k) Plan?

No. This payment deferral is not impacting the transmittal of pilot contributions to the 401(k) Plan or the DAP. Contributions you make via payroll deduction to the 401(k) Plan and/or the DAP will continue to be transmitted by TWA to the Plan Trustee by no later than the first business day of the month following the date such contributions are withheld from your paycheck.

What will happen to the November contribution that was posted to my DAP account if the Company does not ever transfer the funds?

We fully expect the Company to pay, with interest, the deferred contributions to the DAP as well as to start making its regular monthly DAP contributions as soon as it possibly can. In the event of a TWA bankruptcy, however, the unpaid contributions could possibly be subject to a claim filed by ALPA on behalf of the TWA pilots in the bankruptcy court. If that were to occur, it would be necessary to reverse the contribution posting that was made to each participant’s account in relation to the November contribution, since the Plan Trust did not receive the funds for that particular contribution.

Go back to main content | Go back to main navigation

Go back to main content | Go back to main navigation