American Airlines and Union Rally Together for Pensions

American Airlines executives and about 300 union employees joined together Wednesday to argue that Congress should protect pensions -- just as four other major airlines are abandoning or trying to freeze theirs.

Showing a unity that would have been unthinkable two years ago, Chief Executive Gerard Arpey and union members stressed what they called American's ''success story.''

''We've seen what has happened to our colleagues at United, and we don't want that to happen to us,'' said Rick Musica, the Miami-based vice chairman for the Association of Professional Flight Attendants.

American executives are concerned that they could be penalized for ''playing by the rules'' by meeting their pension obligations. In an industry where every cost advantage counts, discount airlines such as Southwest and JetBlue never offered pension funds and many of American's traditional rivals are trying to ditch them.

Default on Plans

Federal bankruptcy judges have allowed both United Airlines and US Airways to default on their pension plans and shift them to the federal Pension Benefit Guaranty Corp. But the pension board can only guarantee a portion of the airline plans' obligations, meaning workers will get less than they expected from their pensions.

Meanwhile, Delta Air Lines and Northwest Airlines executives have told Congress they may need to freeze their pensions to avoid bankruptcy.

Northwest and Delta back legislation that lets carriers defer payments while freezing defined-benefit pensions and switching to a new plan based on employee contributions, Bloomberg News reported. American wants Congress to let companies defer pension payments while maintaining current pension plans that guarantee defined benefits for workers after retirement.

So American workers fanned out over Capitol Hill, lobbying for pension reform that would change some funding rules, increase flexibility and allow for up to 15 years to pay off the shortfall in the pension fund.

''The pension is very important to us, and we want to make sure there is no freeze down the road,'' Mike Lackovic, a 14-year pilot for American from Pembroke Pines, told Rep. Alcee Hastings, a Miramar Democrat.

Other employees described how unions made significant concessions on wages, work rules and benefits two years ago in order to preserve future benefit checks at American.

Hastings said he would support legislation to protect pension plans such as American's, but added that when he looks at badly underfunded private pension plans around the nation, ''I shudder to think where we're heading.''

American is one of South Florida's largest private employers, with about 9,000 workers in Miami-Dade and Broward counties, and is the largest carrier at Miami International Airport.

Its pension health is stronger than that of many other airlines. The airline's plans are about 80 percent funded, while the industry average is about 60 percent.

Making Commitment

American on Wednesday announced a $75 million contribution to its pension plans, bringing its total for the year to about $200 million.

''American is committed to restructuring our company in ways that will allow us to continue to afford our pension obligations,'' Arpey said in a statement.

Chief Financial Officer James Beer said the shortfall in American's pensions is $1.8 billion, compared with Delta's $5.2 billion pension deficit and Northwest's $3.6 billion deficit.

Several employees said they wanted to stress to members of Congress that American is in better financial shape now than it was in two years ago, but should not be forgotten when pension legislation is shaped later this year.

And they said they wanted to educate Congress on the strong corporate-union cooperation at American after years of animosity.

''I never thought I'd see the day when this would happen,'' Musica said of the corporate-union pep rally that kicked off the day. ''We used to have a very rocky relationship.''

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