DALLAS — A federal judge has rejected an attempt by American Airlines to quickly cut off benefits for many of its retirees.
American wants retirees who wish to keep their benefits to pay all the cost. Now the dispute could go to negotiations or a trial.
On Friday, U.S. Bankruptcy Court Judge Sean Lane in New York rejected a request made by American’s former parent, AMR, for the right to immediately eliminate retiree benefits for former pilots, flight attendants and other union workers. Lane granted AMR’s request for a group of nonunion workers.
“American will review his ruling and consider next steps related to the retiree health and life insurance benefits,” American spokesman Casey Norton said in a statement. “We always remain open to productive discussions to finally resolve this matter.”
Chicago lawyers for a committee representing the retirees did not immediately return phone and e-mail requests for comment.
American pays about $10 million a month in health and life insurance benefits for retirees. The financial impact of the judge’s decision wasn’t immediately clear, however, because of the mixed ruling and the fact that the eventual outcome is uncertain.
AMR argued that it could change health and life insurance benefits for retirees even though the company didn’t reserve the right to do so in the language of the benefit plans.
Lane wrote that the decision before him was whether the retiree benefit plans could be interpreted “as a promise to provide benefits for life.” The judge ruled that in most cases, they could be interpreted that way, and plan documents didn’t spell out AMR’s right to stop contributions to the retirees’ benefits.
While Lane’s ruling was a win for former union workers, it was a setback for nonunion retirees who made monthly contributions to their benefit plans while they were still working.
