American Airlines Asks to End Retiree Health, Life Benefit Coverage

By Jerry Geisel

Jul. 9, 2012

American Airlines Inc. and parent company AMR Corp. have filed suit in U.S. Bankruptcy Court asking for a ruling to allow the airline to stop providing retiree health and life insurance to current retirees.

In its suit filed July 6 in U.S. Bankruptcy Court for the Southern District of New York, American and AMR said they never promised to provide benefits for life and reserved their rights to modify the plans.

“Because the retiree health and welfare benefits are not vested, and because modifying retiree health and welfare benefits to reduce costs fall within American’s sound business judgment, American may unilaterally modify health and welfare benefits for current retirees,” the airline argued in the suit.

American, which filed for Chapter 11 bankruptcy reorganization in November 2011, said it intends to freeze three of its four massively underfunded pension plans.

It also intends to freezea fourth plan—one covering its pilots—assuming the Internal Revenue Service finalizes a proposed rule that would allow employers that have filed for bankruptcy to remove plan participants’ right to receive their accrued benefits as a lump sum rather than as a monthly annuity.

Without such a change, American said it fears that a high number of pilots eligible to retire early would take their accrued benefit as a lump sum and retire, adversely affecting the airline’s ability to operate.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management.

What’s New at

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog


What is Earned Wage Access (EWA)? A Few Considerations

Summary Earned wage access (EWA) programs are an increasingly popular way for employees to access their...

benefits, earned wage access products, payroll, time and attendance

workforce blog


EEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances

If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...

ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated

workforce blog


Fixing some common misconceptions about HIPAA

Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...

COVID-19, health care, HIPAA, human resources, wellness