American Airlines to Freeze Pension Plans in November

American Airlines Inc. will freeze its four defined benefit pension plans in November, according to a letter to airline employees from Denise Lynn, senior vice president-people.

To be frozen on Nov. 1 are pension plans for flight attendants, ground crews and mechanics, as well as the pilots’ A plan. The pilots’ B plan, which is a defined contribution plan, will be terminated Nov. 30.

Also beginning Nov. 1, American announced it would match employee contributions to its existing 401(k) plan of up to 5.5 percent for all but the airline’s pilots. Employees currently not enrolled in the 401(k) plan will be automatically enrolled.

The assets in the pilots’ B plan will be distributed to plan participants. Since there is no agreement with the Allied Pilots Association, details regarding a replacement plan have yet to be announced, according to the letter.

The action comes after U.S. Bankruptcy Court Judge Sean Lane last week approved new labor agreements with flight attendants, ground crews and mechanics. Lane also allowed the airline to move forward with changes for pilots even though American and the APA had not agreed to a new contract.

Under its “last, best, final” offer to members of the APA last month, American proposed to freeze the pilots’ plan and instead contribute 14 percent of pay into a new 401(k) plan.

Parent company AMR Corp. is currently under Chapter 11 bankruptcy protection.

American’s four pension plans have $8.3 billion in assets and $18.5 billion in liabilities, both as of Dec. 31, according to AMR’s latest 10-K filing. DC assets totaled $9.4 billion, as of Sept. 30, 2011, according to Pensions & Investments data, the most recent available.

Rob Kozlowski writes for Pensions & Investments, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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