Jan. 20-- American Airlines' employees received good and bad news on Thursday.
On one hand, the Transport Workers Union hired one of the nation's top investment banking firms to represent it in the bankruptcy case of American's parent, AMR Corp.
The downside of the day's developments was the deficiency in American's quarterly pension payments due on Jan. 15, federal and company officials said.
American contributed only $6.5 million of the $100 million it was scheduled to pay into the company's four pension plans this week, officials said.
A company spokesman said AMR was preserving cash in its bankruptcy reorganization.
The Transport Workers Union retained New York-based investment banking and restructuring firm Gordian Group LLC to represent the union in the bankruptcy, TWU officials said.
"We've said from day one that we're going to fight like hell for our members," said TWU International Union President James Little. "That means having the best available talent in our corner so we can level the playing field and advocate effectively for our members."
The TWU represents 26,000 employees at American, among them 6,000 aircraft mechanics and related work groups at American's Maintenance & Engineering Center in Tulsa.
AMR filed its Chapter 11 bankruptcy reorganization petition on Nov. 29, listing assets of $22.87 billion and liabilities of $30.08 billion.
The company proposes to reduce its debt and costs in bankruptcy after posting losses of more than $12 billion over the past 10 years.
Among the concerns of the TWU, the Allied Pilots Association and the Association of Professional Flight Attendants -- all of which are members of the official committee of unsecured creditors in AMR's bankruptcy -- are the fates of AMR's four defined benefit pension plans.
Those concerns were underscored Thursday when American contributed only a fraction of the $100 million that it was supposed to pay into the company's pension plans. The pension plans have assets of $8.3 billion and estimated pension benefits owed of $18.5 billion.
"This is a disturbing development, as the airline has more than $4 billion in cash," said J. Jioni Palmer, spokesman for the Pension Benefit Guaranty Corp., which insures defined benefit retirement plans. "American's actions hurt the financial health of the pension plans and undermine the retirement security of American's workers and retirees."
American's four defined benefit pension plans cover 80,000 employees and 50,000 retirees, the PBGC said.
American spokesman Sean Collins said the company is preserving cash.
"The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15," Collins said.
In recent weeks, American executives and lawyers have suggested the company may terminate its pension plans as one of its cost-saving options.
The PBGC would take over all but $1 billion of the airline's pension obligations if the plans were terminated, although the agency had a $26 billion deficit last year as more companies eliminated pension plans in the recession.
The TWU's retention of Gordian Group reflects the high stakes the parties are playing for in the Fort Worth-based carrier's restructuring, officials said.
Gordian provided restructuring counsel in the bankruptcies of Alamo/National Rent-a-Car, General Motors and LTV Steel.
"Our sole focus will be working with TWU leadership to achieve the best possible outcome for rank-and-file workers under these difficult circumstances," said Peter Kaufman, Gordian's president and head of restructuring and distressed mergers and acquisitions. "Our mission is a critical one. TWU's fight at AMR is a microcosm of the battle workers are engaging in with corporations all across the nation."
In a related development, U.S. Rep. John Sullivan, R-Okla., urged the U.S. bankruptcy trustee to consider the consequences to Tulsa and northeastern Oklahoma of AMR's cost cutting.
"Depending on how the Chapter 11 bankruptcy is structured, it could have a devastating impact on states and localities, like Tulsa ... where American Airlines has served as a primary job creator," Sullivan said in a letter to the Office of the U.S. Trustee in New York, where AMR's case is being heard. "Consequently, Tulsa and its residents could be among those hardest hit by the bankruptcy of AMR Corp., estimated to have a total impact on Oklahoma's Gross Domestic Product of $6,395.5 million and total job impact of 64,000 employees.
"These individuals and their families have served AMR ... with distinction and resolve through the economic downturn and remain an exemplary illustration of the skill of American workers when jobs are kept in this country. It is critical that these jobs remain in Tulsa."
D.R. Stewart 918-581-8451
Copyright 2012 - Tulsa World, Okla.
