Pilots at American Airlines on Wednesday rejected a company proposal that would have frozen their defined benefit plan, leaving the fate of the plan and the overall labor contract in the hands of a U.S. Bankruptcy Court judge.
Under its “last, best, final” offer to members of the Allied Pilots Association, American proposed to freeze the pilots' plan and instead contribute 14% of pay into a new 401(k) plan. Pilots would also have received a 13.5% equity stake in the company, increasing its voice on the creditors committee for parent AMR Corp., which is under Chapter 11 bankruptcy protection.
The rejection of American's offer by a vote of 4,600 to 2,935 leaves the fate of labor talks in the hands of U.S. Bankruptcy Court Judge Sean Lane in New York, who is scheduled to rule Aug. 15 on the company's motion to reject current labor agreements.
Senior pilots were particularly concerned about the company's bid for IRS approval to eliminate lump-sum distributions upon retirement, a union spokesman said.
AMR has already agreed to freeze its three other defined benefit plans for members of unions representing mechanics, ground crew, and flight attendants. The final voting bloc within the Transport Workers Union of America voted Wednesday to accept a separate company offer that does not specifically address pension issues.
American's four pension plans have $8.3 billion in assets and $18.5 billion in liabilities, both as of Dec. 31, according to AMR's latest 10-K filing. DC assets totaled $9.4 billion, as of Sept. 30, 2011, according to Pensions & Investments data, the most recent available.