Coverage of the merger between American Airlines and US Airways

AA to Freeze Pension Plans in November

Airline to instead contribute to employees' 401(k) plans

Wednesday, Sep 12, 2012  |  Updated 11:15 PM CDT
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AA to Freeze Pension Plans in November

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American Airlines says it would freeze pension plans on Nov. 1 and instead contribute to the employees' 401(k) plan.

American Airlines told employees Wednesday night that it is making changes to medical and retirement benefits.

The Fort Worth-based company said it would freeze pension plans on Nov. 1 and instead contribute to the employees' 401(k) plan.

Under the replacement benefit, American will match dollar-for-dollar up to 5.5 percent of employees' eligible earnings to their $uper$aver 401k accounts.

The pension plans for pilots will also be frozen on Nov. 1. The company said a replacement plan for pilots would be determined later because the airline did not have an agreement with the Allied Pilots Association.

Employees will retain all of the pension benefits earned until Nov. 1. They will be eligible to draw their pensions at retirement as specified in the plan, American said.

American also announced new medical benefits for employees and people who retire on or after Nov. 1.

People who retired before Nov. 1 will keep their current medical and life insurance benefits while the company restructures. The airline has proposed changing their benefits to match the ones it is implementing for new retirees.

The company also announced that it would not offer life insurance to employees who retire on or after Nov. 1.

American said it was moving forward with employee changes after it the bankruptcy court approved its agreements with the Association of Professional Flight Attendants and Transport Workers Union and gave the airline permission to throw out its contract with the APA.

The company also issued a statement about its changes to maintenance operations.

On Tuesday, NBC 5 reported that work on Boeing 777 jets would be outsourced to Hong Kong, according to the president of the Local Transport Workers Union, who was briefed on the airline's plans.

"As we work to streamline all areas of our business and dramatically reduce our costs, it's simply not efficient to have three maintenance bases performing work," American Airlines spokesman Bruce Hicks said in the statement. "In addition, we will move forward this month with our plans to better align with other airlines and use third-party providers for some of our maintenance."

American said it expects to wind down operations at its maintenance hub at Alliance Airport in Fort Worth by the end of the year and close it by April.

"Fortunately, we are able to offer many of our people voluntary early out options and alternative positions at other American Airlines maintenance locations," Hicks said. "While it is necessary to restructure our maintenance system to best serve the needs of today's operation and fleet, it does not make these decisions any easier. We remain committed to moving forward so we can return American to its rightful place as an industry leader."


American Airlines Merger:
Complete coverage of the merger between American Airlines and US Airways into the newly-formed Fort Worth-based company, American Airlines Group (AAL). Click here for more.

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