Statement from PBGC Director Josh Gotbaum on Agency's Appointment to American Airlines Creditors Committee
FOR IMMEDIATE RELEASE
December 05, 2011
WASHINGTON—Pension Benefit Guaranty Corporation Director Josh Gotbaum released the following statement today on the agency's appointment to the AMR bankruptcy unsecured creditors committee:
"We're committed to working with American Airlines, their workers, retirees and other parties, so the company can successfully reorganize while also preserving its pension plans. Based on early estimates, American Airlines employees and retirees could lose at least a billion dollars in pension benefits if the airline terminates their plans," Gotbaum said.
"In addition to seeing their pensions cut, workers have also lost healthcare benefits when companies terminate their pension plans. As we did with Visteon, and with some plans at Delta and Northwest Airlines, we will encourage American to fix its financial problems and still keep its pension plans."
American Airlines sponsors four traditional pension plans that cover almost 130,000 participants. As of today, the plans collectively had about $8.3 billion in assets to cover about $18.5 billion in benefits. If American Airlines were to end its plans, the agency would be responsible for paying about $17 billion in benefits; at least a billion dollars in benefits would be lost.
A termination would also weaken the financial condition of PBGC, which has a record $26 billion deficit as a result of failed plans the agency has already assumed.
In cases where plans cannot be saved, PBGC steps in and pays benefits. Currently, the agency is responsible for about 1.5 million people in more than 4,300 failed plans. Each month, on average, PBGC pays about $460 million to more than 870,000 retirees and is responsible for future payments to 628,000 people who haven't retired.
PBGC protects the pension benefits of 44 million Americans in 27,500 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans.
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PBGC No. 12-10