Our People

Our Approach

We need to make company-wide changes to our current retirement benefit plans and transition the company to a sustainable plan. American’s unfunded pension obligation is one of three key components we must address in order to put us on a path to restore our place at the top of our industry.

Targeted Cost Savings

American's pension plans are very expensive – we spend more on pension plans than our competitors do. When we outlined our proposed business plan on February 1, we presented our ideas on how best to reduce our costs and transform our airline. That included terminating the company’s defined benefit pension plans and transitioning to defined contribution plans. However, while we knew the necessary employee savings of $1.25 million would not change, we realized that along the way, there could be modifications to how we get there.

 

By working collaboratively with the Unsecured Creditors Committee (UCC) and the PBGC, we are pleased to report that we’ve developed a solution that would allow us to pursue a freeze of our defined benefit pension plans for non-pilot employees instead of seeking termination. Freezing the pension plan for pilots poses additional challenges, and we are working with the PBGC, the UCC and APA to identify acceptable alternatives to terminating that plan.

 

For independent employees – agents, reps, planners, support staff and management – we will develop a plan to freeze the AMS pension plan and implement the replacement company matching benefit under the $uper$aver 401(k) plan.  

 

By freezing the non-pilot pension plans, employees would retain the full value of benefits accrued for service prior to the date the plan is frozen, and those benefits would not be reduced to PBGC guarantee levels in retirement. Employees would continue to earn vesting service. Freezing would also preserve for non-pilot employees the ability to satisfy the requirements to obtain the frozen benefit under the early retirement option. We know these are options many employees value.

 

While freezing our non-pilot plans won’t change our need to reach the necessary savings target called for in our business plan, we are hopeful that this will help us move quickly to reach agreements with the unions so that we can focus on the road ahead.

 

For an additional resource, please see Jeff Brundage’s letter to employees from March 7.

*Working jointly with APA and PBGC to pursue a freeze option.