As the Chapter 11 bankruptcy case involving American Airlines and its parent company, AMR, proceeds, questions continue to involve the airline’s employees and their pensions.
The latest news coverage indicates American employees and retirees could lose as much as $1 billion if the Pension Benefit Guaranty Corporation (PBGC) has to take over the airlines’ four pension plans.
As Rose Walker’s Jody Rudman notes in an interview with Fil Alvarado of KDFW Fox 4, employees will have to be ready to accept less.
“It’s a terrible and heartbreaking situation for people who have been working at the airline for as long as they have, and who are planning their lives and retirement based on what they were expecting to get,” she said.
The report also noted that while the AMR pension plan is insured, the caps on that protection and the loss of any new funding by AMR could have a big impact on all participants, regardless of how long they have been employed by the airline.
There is also speculation that U.S. firms or taxpayers may be on the hook to pay for American’s massive pension bill if the carrier chooses to drop its pension plans as part of restructuring efforts. In that case, the PBGC, which already is overburdened with supplying compensation for failed pension plans, might have to take on its biggest challenge ever, the estimated $10-billion that American and AMR have failed to fund for their pension plans.