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Fri, Jan 20, 2012

AMR Corp Reportedly Behind On Pension Payments

Airline Management Says It Was The 'Appropriate Course Of Action'

The Pension Benefit Guaranty Corporation, an agency of the federal government, said Thursday that AMR corp is over $90 million behind in payments to its employee pension plans.

The payment due by January 15th was some $100 million, but PBGC says that the company had contributed just $6.5 million by the deadline. The Wall Street Journal reports that an AMR spokeswoman said that the company saw the move as "the appropriate course of action" to "preserve cash."

AMR has hinted since it filed for Chapter 11 bankruptcy protection that it might have to reduce payments to the pension system, which the agency calculate to have total obligations of $18.5 billion. In a statement made prior to the pension contribution deadline, Pension Benefit Guaranty Corporation Director Josh Gotbaum released statement criticizing AMR for its actions. "Counsel for American claims that it needs to kill its employees' pensions in order to be competitive with other major carriers," he said. "The numbers tell a different story: Delta Airlines, which reorganized in bankruptcy, pays an average of $13,210 per employee in pension costs - almost 2/3 more than American's pre-bankruptcy cost of $8,102.
 
"American has more than $4 billion in cash; some of that money should already have been paid into its pension plans.  However, Congress, hoping to preserve plans, allowed American to defer the payments.  It would be a tragedy if American repaid Congress's generosity by turning around and killing the plans anyway," Gotbaum said.

FMI: www.pbgc.gov, www.aa.com

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