American Airlines Pensions Face Severe Cutbacks if Plans Terminate
If American Airlines terminates its pension plans, many of the company’s 130,000 workers and retirees will face severe cuts in their pension benefits.
The maximum benefit PBGC can pay American Airlines employees is capped at $54,000, the maximum allowed under law when the company filed for bankruptcy, Nov. 29, 2011. For many retirees that figure is much lower:
- The maximum guarantee is only $35,100 if the retiree is age 60.
- The maximum falls to $24,300 for a retiree aged 55.
For example, a 52-year-old pilot with 25 years of service making a salary of $155,000 could expect to earn an annual pension of $46,500 payable at age 60. If American Airlines terminates its pension plan for pilots, that same pilot could expect only $35,100 from PBGC, a cut of about 25%.
A TWU participant making a salary of $50,000 who attains 15 years of service in the year after the bankruptcy date could expect the following annual pension benefits:
- At least $12,400 at 65 or 60 if the plan continues
- About $11,600 at 65 if the plan is terminated
- $7,192 at 60 if the plan is terminated
A flight attendant making a salary of $31,000 who attains 15 years of service in the year after the bankruptcy date could expect the following annual pension benefits:
- At least $7,700 at 65 or 60 if the plan continues
- About $7,200 at 65 if the plan is terminated
- $4,464 at 60 if the plan is terminated
