AMR loses bid to terminate retiree benefits

Fri Apr 18, 2014 8:23pm EDT
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By Nate Raymond

NEW YORK (Reuters) - A U.S. bankruptcy judge largely declined on Friday to rule that former American Airlines parent company AMR Corp had a unilateral right to terminate benefits for nearly 47,000 retirees.

U.S. Bankruptcy Judge Sean Lane in New York rejected a motion AMR made in 2012 for a ruling holding that the health and welfare benefits it provided retirees had not vested and could be unilaterally modified.

Lane did rule for AMR with regard to some employees, but his ruling was a setback in AMR's bid to shift the program's costs from the company to the retirees, which included both union and non-union employees.

"American will review his ruling and consider next steps related to the retiree health and life insurance benefits," said Casey Norton, a spokesman for American Airlines. "We always remain open to productive discussions to finally resolve this matter."

AMR filed for Chapter 11 bankruptcy protection in 2011, seeking to cut more than $1 billion a year in labor costs.

The company emerged from bankruptcy in November 2013 through a merger with US Airways Group Inc. The combined company is now called American Airlines Group Inc (AAL.O: Quote).

As part of its reorganization, the company sought to renegotiate its collective bargaining agreements with various unions for American Airlines employees.

After having reached deals with unions for its current employees, AMR turned its focus toward benefits provided to its approximately 46,930 retirees.   Continued...

American Airlines aircraft sit on the tarmac at LaGuardia airport following a reservation system outage in New York, April 16, 2013. REUTERS/Carlo Allegri