Airline falls short with pension ante
Written on January 20, 2012
American Airlines contributed only $6.5 million of the $100 million that it was supposed to pay into employee pension plans this week.
The underpayment raised tension between the company, which filed for bankruptcy in November, and federal pension-protection officials.
“This is a disturbing development, as the airline has more than $4 billion in cash,” said J. Jioni Palmer, a spokesman for the Pension Benefit Guaranty Corp., which insures certain types of retirement plans. “American’s actions hurt the financial health of the pension plans and undermine the retirement security of American’s workers and retirees.”
American spokesman Sean Collins said, “The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15, 2012. This action allows the company to preserve cash.”
American and parent AMR Corp. filed for bankruptcy protection Nov. 29 after losing $11 billion since 2001 no fax needed payday loans. The company hopes to reduce debt and labor costs while it reorganizes.
Company executives and lawyers have raised the possibility that American could terminate its pension plans, under which retirees get fixed monthly payments.
PBGC director Joshua Gotbaum has publicly criticized American for even suggesting that it might terminate pension plans. Gotbaum’s agency would take over the airline’s obligations.
The PBGC ran a $26 billion deficit last year, the largest in its history, as the recession and weak recovery caused more companies to eliminate pension plans. Gotbaum has said that taxpayers might have to bail out the agency, if Congress doesn’t raise insurance premiums on private companies with pension plans.