AMR only paid $6.5 mil to their employee pens
 

US says American Airlines underpaid on pensions


US says American Airlines underpaid on pensions.

THE ASSOCIATED PRESS
Updated: 3:56*p.m.*Thursday,*Jan.*19,*2012
Published: 3:26*p.m.*Thursday,*Jan.*19,*2012

DALLAS — 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 tensions between the company, which filed for bankruptcy protection 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 Airlines 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. 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 based on their earnings and years of service. Such "defined-benefit" plans are common in the airline industry but differ from the retirement accounts such as 401(k) plans that are provided by many other U.S. employers.

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.

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January 19, 2012 04:56 PM EST

Copyright 2012, The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Ouch...........

Yep, no surprise here, AA is following a well scripted plan and will unload its pensions onto the Federal Government.

That ought to boost morale. The sick part is the team that crafted the pension unloading plan will be on their way out the door soon with HUGE severance packages/bonuses. It's another case of BOHICA at AMR, nothing's changed in 11 years.

PBGC is onto them, and see's the cash. Me thinks the gov't is getting ready to push back.

I hope so...

Actually, the BK laws have changed significantly since the other legacies all did their chapter 11's. Management does not get a blank check to loot the process for personal gain as was the past. If the current management expects big rewards this time, they'll have to until AFTER the successfully exit BK.

That won't be any REAL problem.. they will shuffle the deck chairs, and when the dust settles they will have protected plans. If they hire Michelle Burns, you know the end is near.

Oh, now the PBGC is concerned. When they took over the US pilot's pension it didn't even do the required audit.

Yeah, being yet another insolvent government program might do that sometimes..