The financially troubled American Airlines has finalized the demise of its employee pension program, the assets of which will be frozen Nov. 1. Future retirees will also receive less paid benefits.
The Dallas Morning News reports that a bankruptcy judge approved contracts Wednesday with eight of the company's nine bargaining units, allowing American officials to go ahead with plans to terminate the existing DB plan.
The Allied Pilots Association did not work out a deal with the airline and arrangements with its members will be finalized in the future.
Recommended For You
A letter sent to airline employees explains that employees, other than pilots, will continue to accrue pension benefits until Oct. 31, at which point the company will instead offer a 5.5 percent match to a 401(k) plan for current workers.
Pilots rejected an agreement in early August which would have seen American switch their benefits to a 401(k) program and contribute an amount equivalent to 14 percent of their earnings.
In the meantime, American is also terminating the pilots' defined contribution plan, which the airline contributed an amount equal to 11 percent of the pilots' pay. Those assets will be frozen Nov. 1 and terminated on Nov. 30, with the remaining money distributed to participants.
Retirement benefits will also be adjusted as part of American's new plans. Employees who retire on Nov. 1 or later will now be required to pay the full costs of their coverage: Those who retire under age 65 will have access to full-cost medical coverage, and those 65 and over will get a guaranteed issue Medicare supplement program. Post-Nov. 1 retirees will also no longer be offered life insurance coverage.
Employees were told that they will also be required to pay more for health insurance programs starting Jan. 1.
The News reports that a considerable number of American Airlines flight attendants have accepted a $40,000 offer to take early retirement. To qualify, they needed to have worked for the airline for at least 15 years. More than half of the carrier's 16,000-plus flight attendants are over the age of 50.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
