American Airlines: We Can Fund Our DB Plan

April 29, 2005 ( - Despite other airlines dropping their pensions, union leaders and executives at American Airlines are continuing to stick to their game plan of keeping their defined benefit pension system intact.

According to American Senior Vice President of Human Resources Jeff Brundage, it doesn’t matter what other airlines are doing: his company will still offer employees traditional defined benefit plans, MarketWatch reports. To make this possible, the airline is asking Congress to make it easier to continue funding its existing plan.

Union leaders agree. “The defined benefit plan is not one to throw away,” stated Ralph Hunter, president of   the Allied Pilots Association, a union that represent American pilots, according to MarketWatch. “We can save this andwe’re going to give it our best shot,”

Other airlines have not made such a commitment; Delta, Northwest, and United Airlines have all attempted in some way to shift employees from traditional defined benefit plans for the cost-savings of defined contribution plans (See Northwest Airlines Latest to Propose DB to DC Move ). In response, some executives at other airlines have urged Congress to ease pension contribution requirements so that they can stay competitive with companies dumping their pensions (See  Airline Pension Payment Deferral Legislation Proposed in Senate ).

However, Brundage claims that it is possible to keep the defined benefit plan if   the airline can return to profitability. Some, however, disagree. AirTran – which offers a defined contribution plan – is one of them. “We don’t see how you can possibly sit back and say ‘We can fund our   plan,'” AirTran senior vice president Richard Magurno said during a recent panel discussion, according to MarketWatch.

In fact, AirTran and other low-cost carriers have said that they are asking Congress to keep the current funding laws in place so that major airlines with bloated pensions do not get an advantage over them.