It has been widely assumed the AMR, parent of American Air, would try to terminate employee pension plans as part of its Chapter 11 process. The company has indicated it needs to cut costs by hundreds of millions of dollars a year to remain viable. AMR plans to cut as many has 13,000 people
Now, AMR has suggested that it will freeze rather than eliminate pension plans–a deal which would save the retirement nest eggs of thousands of workers.
“Freezing the defined benefit pension plans would mean that employees would retain the full value of benefits accrued for service prior to the date the plan is frozen,” said Jeff Brundage, AMR’s senior vice president of human Resources, in a letter to employees.
“Freezing instead of terminating these plans of course would mean we will have significantly larger pension costs than contemplated in our business plan,” Brundage said.
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