AMERICAN AIRLINES Inc.'s decision to freeze, rather than terminate, at least three of its pension plans is a victory for the nation's pension insurance system.

As we reported, American Airlines reversed its decision to fold the underfunded plans and dump onto the Pension Benefit Guaranty Corp. billions of dollars of benefits American promised to its employees and retirees but did not come close to funding.

Parent AMR Corp. told American Airlines employees that it will freeze at least three of the plans and will work with the PBGC and others to avoid termination of the pension plan covering the airline's pilots.

Why the change of heart? The airline has not directly addressed that, saying only that it will seek new capital “at the appropriate time” to cover the cost of maintaining the plans.

Our view is that American became increasingly less certain about its ability to prove that pension plan termination would be necessary for it to successfully reorganize and emerge from bankruptcy. According to the PBGC, the airline has more than $4 billion in cash.

The airline likely would have faced a bruising court battle with the PBGC, which was skeptical that American could not reorganize without folding the plans.

The PBGC cited the case of Delta Air Lines Inc., which emerged in 2007 from bankruptcy protection and whose pension plan costs are substantially higher than American Airlines'. The PBGC took over one Delta pension plan, but the airline froze a second. It also sponsors three frozen pension plans covering employees and retirees of Northwest Airlines Inc., which Delta acquired in 2008.

We applaud the PBGC for resisting American's move to terminate its plans. There is very much a role for the PBGC and its insurance program, which is funded by employer premiums: to take over pension plans when companies truly no longer can afford to sponsor them, and not just to reduce benefit costs.

Any deviation from that role will mean even greater losses for the agency and the need to boost premiums even more, leading more employers to stop sponsoring plans to avoid escalating premiums. And that is a scenario that regulators and lawmakers should do their utmost to prevent from developing.