American Airlines Retirees Committee....Protecting Our Benefits Through the Chapter 11 Process |
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Our Mission StatementThe American Airlines Retirees Committee (AMRRC) was formed by the retirees of American Airlines, for the retirees, to provide representation for all work groups at American Airlines past, present, or future.. As an organization, we will create the affiliations and partnerships necessary to gather the communication and education needed to ensure each and every retiree’s interests are protected. We are committed to being one voice for many faces. How Bankruptcy can Affect American Airlines RetireesWhat protections do Employees and Retirees for Health and Wwelfare Benefits when a Company files for Chapter 11 bankruptcy? Bankruptcy protections for Active and Retired employees vary depending on whether the pay and health and welfare benefits were protected by a contract or not and whether the person is Active or Retired when the company filed for Chapter 11 bankruptcy protection. Following the filing by a company for Chapter 11 bankruptcy protection, the laws of the United States allow a business the opportunity to restructure their debts in order to continue operating and to preserve jobs. Companies and individuals to whom debts are owed can expect to lose much of what they were promised, usually pennies on the dollar in the bankruptcy process. A business such as American, that has made promises to their Employees and Retirees without the benefit of a contract in some areas, may be allowed to make changes, reduce or even terminate Active employees pay and health and welfare benefits as they deem necessary in an effort to reduce their cost structure and exit bankruptcy. Workers protected by a Union contract however, will have the ability to go through an 1113 process, relating to every aspect of their contract provisions before the company can change their contractual work rules and then when and if necessary, enter into an 1114 process to obtain relief with regard to Health and Welfare benefits, Disability and Survivorship benefits and Iife Insurance benefits. Unlike Active workers, Retirees, both Union and Non Union have a limited protection provided to them under the bankruptcy statue 1114 (l) during the bankruptcy process which specifies that a “plan, fund or program” cannot be changed within 180 days of the bankruptcy unless a committee is formed, and the company sits down with the group and tries to work out a compromise that is acceptable to the affected parties or if an agreement cannot be reached by the parties, the Company can go back to court and recommend to the court a solution they believe is fair and favors the balance of the equities. Read more here... |
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Recently all retirees should have received two required notifications – the first one gave notice of the June 4, 2013 bankruptcy hearing in front of Judge Sean Lane to continue the BK process for final approval of AMR’s reorganization exit plan which must be approved by the Court prior to AMR leaving the jurisdiction of the bankruptcy court. Since a part of this reorganization plan includes a merger of American Airlines & USAirways there is also Congressional and Justice Department oversight/approval in play with this merger as well.
The second notice as required by the Pension Protection Act (PPA) of 2006 came to retirees in the form of a “Dear Colleague” letter from Denise Lynn, Senior Vice President of AA, dated April 30, 2013. This letter is required by federal law for any employer that maintains Defined Benefit Plans (pensions). The purpose of this annual letter is to disclose to the plan participants the funding levels, asset values, number of participants and investment policy of the various retirement benefit plans as administered by American Airlines. You have received the specific letter designated for the workgroup that you were a member of prior to your retirement from AA/TWA.
A part of this required notice is also to state clearly a summary of the rules governing the termination of such plans, the guidelines and guarantees of the federal agency (Pension Benefit Guaranty Corporation) that oversees such a termination. As Lynn’s letter states during the course of AA’s bankruptcy these Plans were frozen as of November 1, 2012 for active employees but will continue to be managed and funded by the company in accordance with the funding requirements under the law.
Concerning the issue of Retiree Health Care Plans, presently Judge Lane has no scheduled 1114 Hearing on his docket regarding any modifications to retiree plans. The 1114 process is the section of the bankruptcy process that refers directly to retiree benefits. Any future notice of a hearing on this matter will appear in an AMRRC updated Members Briefing.
As stated many times before the bankruptcy process is both long and frustrating for all potentially impacted retirees of AMR. But as a reminder presently any retiree benefit that was in place on November 29, 2011 (the date of the AMR bankruptcy filing) remains in place unless and until the Court approves, during the 1114 process, any employer requested modification to a retiree benefit plan(s).
The monthly AMRRC on-line chat regarding retiree benefits will take place on Thursday, May 16, from 7 to 9pm CST. This discussion is a resource tool moderated by AMRRC Chair Paul Mazzara. You may join this on-line discussion by going to www.rbassociation.com with your individual questions.
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