AMR Offers Pension Freeze

Bankrupt airline retreats from terminating plans for most employees; hopes to speed labor talks.

AMR Corp.’s American Airlines said today it would switch from terminating pensions to freezing them for most employees, seeking to hasten agreements on $1.25 billion in concessions sought in bankruptcy.

The Transport Workers Union, the largest labor group at American, reached a tentative agreement on the freeze after it was offered. American said it will seek additional capital to fund the frozen pensions, without being more specific. The freeze doesn’t apply to pilots.

Migrating to 401(k)

Freezing benefits would allow employees to keep full benefits accrued prior to the date they’re stopped. American would continue administering the plan and its unfunded pension liabilities would remain on the company’s balance sheet. AMR, which plans to switch to a 401(k) structure going forward, no longer would pay into the pension funds.

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