July 11, 2012 (PLANSPONSOR.com) - American Airlines and its parent company, AMR Corp., are suing to stop providing health care and life insurance benefits to current retirees.
The Washington Post reports the airline wants the bankruptcy judge to rule that it can end the benefits as a way to cut costs in “sound business judgment.” American says it never promised benefits to last the retirees’ entire lives, and it reserved the right to change the benefits plan.
The airline filed Friday’s lawsuit against the Committee of Retired Employees, a group that looks out for retirees’ interests in the bankruptcy case (see “AMR Retirees Ask to Participate in Bankruptcy Case”).
According to The Washington Post, in the lawsuit, AMR said that its liability to provide the benefits for current retirees was $1.26 billion in 2010, and its liability for covering retirees of TWA, which AMR bought in 2001, was $111 million. In February, the airline proposed terminating its pension plans, which would turn them over to the Pension Benefit Guaranty Corporation (see “American Airlines Proposes Termination of Pensions”).