Aloha Airlines' pilots approved a new contract yesterday that terminates their pensions with the company, but the federal agency that would take over their pensions will head into bankruptcy court this morning to challenge Aloha's restructuring plan.

The appeal by the Pension Benefit Guaranty Corp. comes just as Aloha hopes to terminate all of its union pension plans tomorrow and emerge from bankruptcy protection on Thursday. Aloha filed for bankruptcy nearly a year ago, on Dec. 30.

Attorneys for Aloha Airlines and Aloha Airgroup, Inc., said that terminating the employee defined benefit plans is a condition of Aloha's prospective new owners, California billionaire Ron Burkle's Yucaipa Companies and former NFL football star Willie Gault's Aloha Aviation Investment Group. They plan to add up to $100 million of capital into Hawai'i's second-largest airline.

"The consequences of a delay in the consummation of the (restructuring) plan are dramatic," Aloha's attorneys wrote in a court filing on PBGC's appeal. "The obligation of Yucaipa to invest is contingent upon closing the transactions contemplated by the plan on or before (Thursday). Unless the plan is consummated by that date, the debtors' senior lenders' line of credit also matures on (Thursday)."

Aloha's pilots yesterday concluded their balloting and ratified their new contract, said Aloha Capt. Mike Feeney, a spokesman for the pilots' union.

Feeney declined to reveal the breakdown of the vote but said it passed with 90 percent of the eligible pilots casting ballots.

Aloha's pilots could lose up to 50 percent of their annual pensions benefits if they are handed over to the PBGC.

The federal agency has struggled with its own ballooning deficit, in part, because several other airlines have defaulted on their defined benefit plans.

United Airlines and US Airways used bankruptcy earlier this year to transfer their employee pension liabilities — a combined $9.6 billion — onto the federal guarantor agency. Delta Airlines and Northwest Airlines, which both filed for Chapter 11 bankruptcy protection in September, could do the same.

The PBGC, which insures defined-benefit plans of 44 million people and takes over the plans of bankrupt companies, reported a deficit of $22.8 billion at the end of its 2005 fiscal year on Sept. 30.

The federal agency said it assumed responsibility for the pension benefits of an additional 235,000 workers and retirees in 2005, bringing the total to 1.3 million, and paid benefits of $3.7 billion, up from $3 billion in 2004.

Premiums per participant, paid by companies to the agency, totaled $1.5 billion.

The agency is now financed entirely by premiums and interest on investments, but there is growing concern that it may one day have to turn to taxpayers for a bailout that could rival the savings-and-loan crisis of the 1980s.

The Associated Press contributed to this report.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com.