American Pilots Accept Contract With Pension Freeze Provision

Pilots at American Airlines agreed to accept a new contract with a proposal to freeze the pilots’ defined benefit plan and instead contribute 14 percent of pay into a new 401(k) plan, their union announced Dec 7.

The pilots’ approval clears the way for parent company AMR Corp., Fort Worth, Texas, to continue its Chapter 11 bankruptcy proceedings. The pension proposal is contingent on the resolution of the bankruptcy proceedings.

American had already agreed to freeze three of four defined benefit plans for flight attendants, mechanics and ground crew, but failed to reach an agreement with the pilots’ union at that time. In contrast to the last offer, which was rejected by the pilots over pay and work-rule issues, the revised offer was approved by 74 percent.

American Senior Vice President Denise Lynn said in a statement that the pilots’ approval “gives us the certainty we need for American to successfully restructure.”

However, Allied Pilots Association President Keith Wilson said in a statement that the union will continue to pursue alternatives. “The APA leadership continues to support a merger with US Airways as the best path to a stronger, more competitive American Airlines that will in turn enhance our pilots’ long-term career prospects,” Wilson said.

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.

Hazel Bradford writes for Pensions & Investments, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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