January 20, 2012 by staff
American Airlines, American Airlines’ employees received good and bad news on Thursday. On one hand, the Transport Workers Union hired one of the nation’s top investment banking firms to represent it in the bankruptcy case of American’s parent, AMR Corp.
The downside of the day’s developments was the deficiency in American’s quarterly pension payments due on Jan. 15, federal and company officials said.
American contributed only $6.5 million of the $100 million it was scheduled to pay into the company’s four pension plans this week, officials said.
A company spokesman said AMR was preserving cash in its bankruptcy reorganization.
The Transport Workers Union retained New York-based investment banking and restructuring firm Gordian Group LLC to represent the union in the bankruptcy, TWU officials said.
“We’ve said from day one that we’re going to fight like hell for our members,” said TWU International Union President James Little. “That means having the best available talent in our corner so we can level the playing field and advocate effectively for our members.”
The TWU represents 26,000 employees at American, among them 6,000 aircraft mechanics and related work groups at American’s Maintenance & Engineering Center in Tulsa.
AMR filed its Chapter 11 bankruptcy reorganization petition on Nov. 29, listing assets of $22.87 billion and liabilities of $30.08 billion.
The company proposes to reduce its debt and costs in bankruptcy after posting losses of more than $12 billion over the past 10 years.
Among the concerns of the TWU, the Allied Pilots Association and the Association of Professional Flight Attendants – all of which are members of the official committee of unsecured creditors in AMR’s bankruptcy – are the fates of AMR’s four defined benefit pension plans.
Those concerns were underscored Thursday when American contributed only a fraction of the $100 million that it was supposed to pay into the company’s pension plans. The pension plans have assets of $8.3 billion and estimated pension benefits owed of $18.5 billion.
“This is a disturbing development, as the airline has more than $4 billion in cash,” said J. Jioni Palmer, spokesman for the Pension Benefit Guaranty Corp., which insures defined benefit retirement plans. “American’s actions hurt the financial health of the pension plans and undermine the retirement security of American’s workers and retirees.”
American’s four defined benefit pension plans cover 80,000 employees and 50,000 retirees, the PBGC said.
American spokesman Sean Collins said the company is preserving cash.
“The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15,” Collins said.
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