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PBGC updates estimate of funding relief for American Airlines


WASHINGTON—Congress gave American Airlines Inc. an estimated $2.1 billion in pension funding relief over the past six years, nearly double an earlier estimate, the Pension Benefit Guaranty Corp. said Monday.

According to the PBGC, American Airlines received specific funding relief in the Pension Protection Act of 2006 and an Iraq War spending bill in 2007 that allowed airlines to spread their unfunded liability in 2008 over 10 years instead of seven. The war spending bill also let American use an interest rate of 8.25% to compute required contributions for 2008 through 2017. American and other airlines got additional relief for required contributions in 2006 and 2007.

PBGC officials are fighting plans by the airline's parent company, AMR Corp., to terminate its four defined benefit plans as it goes through Chapter 11 bankruptcy reorganization. PBGC Director Joshua Gotbaum is reminding members of Congress that the airline received several rounds of pension plan funding relief from 2006 to 2011, which allowed the company to make lower pension contributions.

The PBGC would be responsible for $8.7 billion in unfunded benefits if the four American pension plans—for pilots, flight attendants, agents and ground crew—are terminated, according to preliminary PBGC estimates.

Hazel Bradford is a reporter for Pensions & Investments, a sister publication of Business Insurance.

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