Pilots lose lump-sum pension option in American bankruptcy

January 2, 2013 7:59 pm Published by

A U.S. Bankruptcy judge has approved a request by American Airlines to eliminate a lump-sum pension option for pilots who retire. The airline, which is in Chapter 11bankruptcy, argued that if the pilots were able to take their pensions in a single lump sum, too many would choose to retire, creating operational problems for the company. The unsecured creditors committee agreed with the airline, indicating they would have opposed the airline’s reorganization plan if it retained the lump-sum option.

Pilots still will be able to receive their pension benefits in monthly payments over their lifetimes under the labor terms approved by the judge. But even those pilots who retired before American’s bankruptcy will lose their ability to take their pensions in a lump sum. The judge rejected their argument that no operational risk would be created if they kept the option because their departures already had occurred.

The judge also approved new collective bargaining terms that affect how ex-TWA pilots will be merged into the pilot union’s seniority list after the airline closes the former TWA pilot base in St. Louis. The new contract terms are a critical milestone in American’s quest to emerge from bankruptcy.

When a business files for Chapter 11 bankruptcy, it must develop a plan for debt reorganization. The plan’s elements may include things like a repayment schedule, issuing stock to creditors, a sale of assets or renegotiating union contracts. Creditors form committees that negotiate with the company to get the best deal for themselves, and the bankruptcy judge must approve the final plan. An experienced bankruptcy attorney can help a business owner develop the right reorganization plan and negotiate with creditors.

Source: The Dallas Morning News, “Bankruptcy judge dumps American Airlines pilots’ lump-sum option on pensions, approves new contract with Allied Pilots Association,” Terry Maxon, Dec. 19, 2012

facebooktwittergoogle_pluslinkedinmailby feather
Free Debt Consultation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Associations & Memberships:
  • New York State Bar Association
  • National Association of Consumer Bankruptcy Attorneys
Rock County New York | Town of Stony Point | Town of Haverstraw | Town of Ramapo | Town of Clarkstown | Town of Orangetown

Ugell Law Firm, P.C.
151 North Main Street , 2nd Floor :: Suite 202 :: New City, NY 10956
Phone: 845-521-7841 :: Telephone: 845-213-1250 :: New City Law Office Map

Se Hable Español

Rockland County Bar AssociationMax Gardener's Bankruptcy Boot Camps | Lizmere South Mountain FarmNew York State Bar AssociationNational Association of Consumer Bankruptcy Attorneys