American Airlines had been looking to dump its pension obligations on the federal government as part of its bankruptcy reorganization, a move that would have meant pension cuts for some of the airline's 130,000 current workers and retirees. But today American and the Transport Workers Union, which represents 26,000 workers at the airline, announced a plan to freeze pensions instead of terminating them.
Freezing the pensions means that workers will be keeping what they have already earned rather than being cut back to the maximum allowed by the U.S. Pension Benefit Guaranty Corp. Workers will also, according to a Q&A sent out by the airline, "continue to earn vesting service and retirement eligibility service. This means those who are not currently vested or eligible for early retirement could still grow into those options."
The pilots' pension plan will not be frozen, due to a lump sum pension option that might lead to a surge in retirements "which presents severe operational risk"—i.e. not enough pilots still working.
TWU President James Little said:
"We would have preferred to keep the existing defined benefit plan in place, but that simply was not possible. [...] We are not out of the woods, and we can’t implement the pension plan freeze until we reach an overall agreement. But this is a very important step forward."
Little
recently told Josh Eidelson that if the pension plan was frozen, he didn't think it would ever be unfrozen, and that "From a personal standpoint, I don’t see that that would be the way of the future…I think defined benefit plans are going to be few and far between."