Compliance November 29, 2011
PBGC: American Airlines Bankruptcy Could Hurt Financial Position
November 29, 2011 (PLANSPONSOR.com) - Pension Benefit Guaranty Corporation (PBGC) Director Josh Gotbaum said based on the agency’s estimates, American Airlines employees could lose a billion dollars in pension benefits if American terminates its plans.
Reported by Rebecca Moore
American’s parent company, AMR Corp., announced it has filed for bankruptcy. American Airlines sponsors four traditional pension plans that cover almost 130,000 participants. As of today, the plans collectively had about $8.3 billion in assets to cover about $18.5 billion in benefits.
According to Gotbaum’s statement, if American Airlines were to end their plans, the agency would be responsible for paying about $17 billion in benefits; about $1 billion in benefits would be lost.A termination would also weaken the financial condition of PBGC, which has a record $26 billion deficit as a result of failed plans the agency has already assumed (see Some Positives Exist Amid Dire PBGC Financial Picture).