The PBGC petitioned the U.S. Bankruptcy Court handling American Airlines parent AMR Corp.'s Chapter 11 bankruptcy case to force the company to produce financial documents and written statements regarding the fate of four defined benefit plans.
The Pension Benefit Guaranty Corp.'s Thursday motion to the bankruptcy court in New York stated that comments made last month by American's lead bankruptcy counsel, Harvey Miller of Weil, Gotshal & Manges, “combined with AMR's aggressive timetable for emergence from Chapter 11 and AMR's failure to produce the information requested by PBGC, give rise to concerns that AMR may seek a decision by the Bankruptcy Court on plan termination” before the PBGC has enough information to state its case.
The PBGC estimates the four plans' total benefit liabilities equal $18.5 billion, while assets are $8.3 billion.
In the same court document, the PBGC noted that AMR “has made no statements” about the four defined benefit plans — for pilots, flight attendants, ground crew and agents — but that Mr. Miller's comments in the press were “a dramatic departure from AMR's position prior to the bankruptcy filing,” citing the transcript of a July 2011 earnings call with then-CEO Gerard Arpey stating “the biggest place where we are off market is actually not pensions.” The defined benefit plans, Mr. Arpey said on the call, were not “necessarily the biggest structural disadvantage we have.”
PBGC is the largest creditor of AMR, which filed for Chapter 11 bankruptcy protection on Nov. 29. At that time, CEO and President Thomas W. Horton said at a press briefing that pensions “are part of our cost disadvantage … but we're not prepared to say how that will go.”