American Airlines' parent company told its employees Wednesday that it does not plan to end its pension plans as part of its bankruptcy restructuring, but instead hopes to freeze them.
The approximate 130,000 airline employees affected will be able to keep their existing pensions but will not earn additional benefits. The proposal will include American's ground workers and flight attendants but not members of its pilots' union.
AMR, which owns American, filed for bankruptcy in Nov. 2011 and has four employee pension plans with assets of approximately $8.3 billion and obligations of $18.5 billion.
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The PBGC, which had been actively involved in a surprisingly vocal campaign to ensure that airline management did not drop their pension obligations or shift those responsibilities to the corporation, reacted positively to the announcement.
"It is great progress and good news that American recognizes it can reorganize successfully and preserve its employees' pension plans," said director Josh Gotbaum, in a statement. "We're also glad the company is willing to work with us to preserve their pilot plan too.
"Bankruptcy forces tough choices, but that doesn't mean pensions must be sacrificed for companies to succeed. We will continue to work with American and the other participants in the bankruptcy to ensure that success."
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