WASHINGTON—American Airlines today announced that as part of its plan of reorganization, it wants to terminate its pension plans. The pensions are underfunded by about $10 billion, and Americans' retirees would lose at least $1 billion in benefits if the plans end. Under federal law, if a company in bankruptcy wants to end its pensions, it must demonstrate that doing so is the only way it can reorganize.
PBGC Director Josh Gotbaum had this to say:
"Before American takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative. Thus far, they have failed to provide even the most basic information to decide that."
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.