Some American Airlines pilots, concerned about turmoil in the industry, are considering taking early retirement to protect their pension benefits, a move that could cause problems for an airline if it happens in large numbers.
American executives said Friday that they aren't facing a shortage of pilots and have no indication that a significant number of pilots have begun retiring early. But union officials say they are hearing more inquiries from worried pilots wondering whether to retire early.
"Many if not most pilots are understandably worried about their futures," said Ralph Hunter, president of the Allied Pilots Association, in a letter to members this week.
In an interview Friday, Hunter said the union believes that American's pensions are sound, at least in the short term.
And he said legislation being debated in Congress could increase the stability of the airline's pension plan.
He stressed that early retirement is a drastic step that shouldn't be taken lightly.
"We understand that some guys are a little antsy, but there's really nothing that has changed," he said. "Your risk of losing your lump-sum benefits are the same as they've always been."
He said 59 pilots took early retirement last month, which is "ever so slightly higher than average."
The airline has about 10,000 pilots.
American is one of the few remaining large airlines with a traditional pension plan.
United Airlines and US Airways terminated their plans in bankruptcy, and Delta Air Lines and Northwest Airlines have frozen their plans.
American has been lobbying Congress for relief from pension-funding rules.
The plan costs the airlines several hundred million dollars annually, and that number could rise dramatically in coming years if rules aren't relaxed.
Some pilots are considering retiring early because they have the option of taking their benefits at once in a lump sum now, rather than risk losing them if American files for bankruptcy.
Although American is in far better shape than most major airlines, the airline is still losing money, and many fear that rising fuel costs could worsen the airline's condition.
Early retirements became a serious problem for Delta last year, with hundreds of pilots resigning sooner than expected on bankruptcy fears. The airline had to shoulder the cost of paying the lump-sum pensions and also faced additional training costs as it was forced to replace older pilots ahead of schedule.
But so far, American hasn't had a problem with early retirements, spokesman Tim Wagner said.
"With the uncertainty in the industry, and with issues with pensions at other companies, we have anticipated that there is a potential for an increase in early retirements among our pilots," he said. "But we've been working with [the union] to mitigate the effects, and we're not facing an immediate shortage of pilots in any way."
Hunter said some pilots retired early in 2003 on similar fears, "only to regret their choice a few months later." That's why he cautioned union members not to "make this critical decision based on rank speculation or what someone else is doing."
He told members that American executives have not given the union any indication that bankruptcy is a near-term threat.
"I'm not going to tell anyone to retire or not to retire," he said. "But what's important is that they make their decision on an informed basis."
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