Reuters: Bankruptcy News: AMR looks to curb retiree benefits

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AMR looks to curb retiree benefits Jul 6th 2012, 23:23 Fri Jul 6, 2012 7:23pm EDT * Seeks to end coverage for retirees over 65 * Retirees under 65 would pay for AMR's health plan By Nick Brown NEW YORK, July 6 (Reuters) - The parent company of bankrupt American Airlines has sought court permission to reduce retiree health benefits and add out-of-pocket costs for access to certain coverage. Bruce Hicks, a company spokesman, said on Friday that AMR Corp would discontinue retiree life insurance and would end medical coverage for those over 65. That group would, instead, have access to a Medicare supplement at their own cost. Retirees under 65 would still have access to company plans, but at their own expense as well, Hicks said. AMR asked a New York bankruptcy judge to declare that it has the right to alter company-funded retiree benefits because they were never vested. American's retiree health plans cover more than 40,000 people. In the filing, American argued that it would be required to maintain company-provided benefits only if it had promised to provide those benefits for life. AMR made no such promises, and explicitly reserved its right to modify its retiree benefit plans, it said. "The restructuring process is difficult for everyone affected, and we understand any changes to these benefits are concerning to our retirees," Hicks said. A lawyer for a committee of retired workers did not respond to requests for comment. Other U.S. airlines reduced retiree health plans while in bankruptcy and eliminated or changed pension plans as well to save money. American sought bankruptcy protection in November, citing high labor costs. AMR has said it must save hundreds of millions of dollars a year in labor costs, and has sought to achieve those savings through concessions from workers, including unionized pilots, flight attendants and ground workers. Unions, livid over those demands, are supporting an effort by US Airways to merge with AMR, a prospect the unions say could salvage some jobs and benefits. AMR said it had $1.25 billion in retiree health and welfare liability as of 2010. The proposed cuts to retiree benefits are very similar to previously proposed changes that would affect current workers who retire in the future. The case is In re AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463. Link this Share this Digg this Email Reprints

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