Originally Posted by
sailingfun
Is there (sic) plan underfunded?
Not yet. At least according to the most recent Form 5500.
Originally Posted by
sailingfun
If the plan is not underfunded to an extent that it would make it difficult for the company to emerge from Chapter 11 is can't be terminated.
In addition if the plan does reach a critical underfunding level then lump sums must be suspended regardless of if the company is in chapter 11. This happened at Delta prior to the termination of the plan. There has been no mention that the AA plan is near this level.
The run on retirements was caused by a provision in the AA plan that allows a lookback to retire at higher market rates. Anytime there have been a big slump in the market you get a surge in AA retirements using the lookback.
All true. But considering their pilots can take a 100% lump sum, my math puts that in the $1m range for a typical senior guy, and considering their demographics are similar to ours, they have a bunch of old guys with benefits in that range. It wouldn't take that much of a "run on the bank" to see their plan go deeply underfunded. Lump sum restrictions of pension legislation would come into play at some point, but I don't know the rules on that. However, if their contract requires the payment of lump sums, then an argument could/would/should be made that AMR needs to fund the plan as required to permit the continuance of lump sums... And THAT could get expensive, real fast.