AMR Corp. wants to terminate all four of its pension plans as part of a broad bankruptcy restructuring that aims to cut costs by $2 billion a year, the company said today.
"American's pension plans are very expensive – we spend more on them than our competitors spend on their retirement plans. We simply do not see a way we can secure the company’s future without terminating our defined benefit plans," the company said in materials posted on a company website.
The Fort Worth-based carrier is also proposing to replace its existing retirement benefit plans with defined contribution plans such as 401(k)s. American said all active employees would be offered a 401(k) plan with non-pilot employees receiving a company match dollar-for-dollar of up to 5.5 percent while pilots would participate in a new plan that will replace its defined benefit plan and B plan.
Details on job cuts and other operational changes were not released. Executives are meeting with union leaders today to detail their plans for each work group, and more details are expected to be released later today.
In a letter to employees, AMR's chairman and CEO Tom Horton said the company aims to improve its finances by $3 billion a year, with $1 billion coming in revenue improvements and $2 billion in reduced costs including restructuring debt and leases, grounding older planes and "necessary employee -related changes."
The company aims to reduce employee-related costs by more than $1.25 billion, Horton said, saying that all work groups, including management, would need to reduce costs by 20 percent.
AMR has more than 80,000 employees, including about 25,000 in North Texas.
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