• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Allied Pilots Association Cautions American Airlines Management About Pension Relief Contained in Spending Bill

Posted on: Friday, 25 May 2007, 18:00 CDT

The Allied Pilots Association (APA), representing the 12,000 pilots of American Airlines (NYSE: AMR), reacted to news reports that emergency spending legislation contains new, airline-specific pension relief by cautioning its carrier's management against any reduction in cash contributions.

"Four years ago our pilots agreed to annual concessions of $660 million as part of American Airlines' consensual, out-of-court restructuring. One of our pilots' principal motivations for agreeing to such deep concessions was the preservation of our pension benefits, which we recognized would be at risk in bankruptcy court," said Captain Ralph Hunter, APA president. "It would be ill-advised for American Airlines management to cease making ongoing cash contributions to our plans simply because the legislation may permit them to do so.

"We expect management to continue properly contributing to our pensions on an ongoing basis," he said.

The new legislation is intended to help level the playing field between carriers that resorted to Chapter 11 bankruptcy during the lengthy airline industry downturn--such as Delta, Northwest and United--and those that did not, such as American and Continental. Under the new legislation, lawmakers have proposed permitting American, Continental and other carriers to use a higher interest rate of 8.25 percent as part of estimating year-over-year asset performance in their pension plans and calculating funding obligations. The legislation would permit the carriers to use the higher percentage rate without having to freeze their plans.

"While raising the interest rate will automatically improve projected funding levels, it doesn't change the necessity of covering through ongoing contributions the liabilities that our pension plans accrue annually," Hunter said.

Founded in 1963, the Allied Pilots Association--the largest independent pilot union in the U.S.--is headquartered in Fort Worth, Texas. APA represents the 12,000 pilots of American Airlines, including 2,688 pilots on furlough. The furloughs began shortly after the September 11, 2001 attacks. Also, several hundred American Airlines pilots are on full-time military leave of absence serving in the armed forces. The union's Web site address is www.alliedpilots.org.

American Airlines is the nation's largest passenger carrier.

Source: Business Wire

More News in this Category