Statement from PBGC Director Josh Gotbaum on AMR Corp. Bankruptcy
FOR IMMEDIATE RELEASE
November 29, 2011
WASHINGTON—Pension Benefit Guaranty Corporation Director Josh Gotbaum
released the following statement today on the Bankruptcy Filing of AMR
Corp.:
"Today American Airlines' parent company filed for bankruptcy. When this
happens employees and retirees worry — and they should. In past bankruptcies,
workers and retirees have lost their healthcare and seen their pensions cut.
Based on our estimates American Airlines employees could lose a billion dollars
in pension benefits if American terminates their plans.
"This is true even if PBGC becomes responsible for those plans, because
Congress has limited the size of the pensions we can pay. Unfortunately, when
the agency assumed airline plans in the past, many people's pensions were cut,
in some cases dramatically. That's why PBGC always tries first to preserve
plans, even after companies enter bankruptcy. As we did with Visteon, and with
some plans at Delta and Northwest Airlines, we will encourage American to fix
its financial problems and still keep its pension plans."
American Airlines sponsors four traditional pension plans that cover almost
130,000 participants. As of today, the plans collectively had about $8.3
billion in assets to cover about $18.5 billion in benefits. If American Airlines
were to end their plans, the agency would be responsible for paying about $17
billion in benefits; about $1 billion in benefits would be lost.
A termination would also weaken the financial condition of PBGC, which has a
record $26 billion deficit as a result of failed plans the agency has already
assumed.
In cases where plans cannot be saved, PBGC steps in and pays benefits.
Currently, the agency is responsible for about 1.5 million people in more than
4,300 failed plans. Each month, on average, PBGC pays about $460 million to more
than 870,000 retirees and is responsible for future payments to 628,000 people
who haven't retired.
About PBGC
PBGC protects the pension benefits of 44 million Americans in 27,500
private-sector pension plans. The agency is directly responsible for paying the
benefits of more than 1.5 million people in failed pension plans. PBGC receives
no taxpayer dollars and never has. Its operations are financed by insurance
premiums and with assets and recoveries from failed plans.
— ### —
PBGC No. 12-08