American Airlines Seeks to Modify Retiree Benefits

AMR Corp.’s American Airlines, which is cutting labor costs while in bankruptcy, asked a court to rule it can unilaterally modify retiree benefits because they aren’t vested.

American is under “no legal compulsion” to continue to provide retiree health and welfare benefits, the airline said in a complaint filed today against a retiree committee in U.S. Bankruptcy Court in Manhattan.

The airline today also proposed changes to company-paid medical benefits and life insurance to the retiree committee appointed in AMR’s bankruptcy, the Fort Worth, Texas-based airline said in a statement, without being more specific.

“We understand any changes to these benefits are concerning to our retirees,” Bruce Hicks, an American spokesman, said in an e-mailed statement. “It’s important to remember the changes we’re proposing are very similar to those we propose to make for active employees when they retire.”

AMR provides benefits to five groups of retired workers: pilots, ground workers, flight attendants, nonunion retirees and retired employees of Trans World Airlines Inc., according to the court filing. American acquired TWA in April 2001.

AMR has about 40,000 current retirees, including American and TWA.

For current workers, American plans to end employer-paid retiree medical benefits, although it will continue to provide access to medical coverage for retirees who choose to pay for it, the company said on a website detailing changes planned in its restructuring.

The main bankruptcy case is In re AMR Corp. (AAMRQ), 11-15463; the retiree case is AMR Corp. v. Committee of Retired Employees, 12- 01744, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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