PBGC named to unsecured creditor committee in American Airlines bankruptcy

NEW YORK—The Pension Benefit Guaranty Corp. was named Monday to a committee of unsecured creditors of AMR Corp., the parent company of American Airlines Inc., which filed for bankruptcy reorganization last week.

The committee will represent organizations and individuals in the bankruptcy proceedings. The appointment was made by a bankruptcy trustee in New York, a PBGC spokesman said.

“We're committed to working with American Airlines, their workers, retirees and other parties so the company can successfully reorganize while also preserving its pension plans,” PBGC Director Joshua Gotbaum said in a statement.

According to PBGC estimates, the four American plans have about $8.3 billion in assets and $18.5 billion in benefits promised to plan participants, of which the PBGC would guarantee about $17 billion if the plans fold.

If that estimate holds up and the plans are terminated, the resulting $8.7 billion loss would be the biggest in the PBGC’s 37-year history. The agency’s biggest loss—$7.35 billion—came in 2005 when the PBGC took over United Airlines’ four massively underfunded plans after the airline filed for bankruptcy.

American has not said whether it intends to shed its pension plans, which have about 130,000 participants.

“American's pension plans are very expensive. The company spends more on them than our competitors spend on their retirement plans. Given American’s plans to reduce its costs to a more reasonable level in line with industry norms, these costs and many other factors are considerations when deciding whether to continue the pension plans,” an American spokesman said.