IRS Agreed To Regulatory Changes To Allow The Move

Following regulatory changes by the U.S. Treasury and the IRS, American Airlines has been given approval to freeze its pilots' pension plan. The move avoids a termination of the so-called "A-Plan" proposed by AA in February.

On Thursday, the IRS and Treasury created an exception to its rules allowing American, and other companies in a similar position, to eliminate a "lump sum" option from the union's pension plan. The airline will still have to pay benefits in full, but pilots cannot retire and take their pensions in one large payment.

The Dallas Morning News reports that the so-called "A-scale" pilots were opposed to the plan, but the Allied Pilots Association (APA) as an organization, found the change to be preferable to a termination of its member's pensions. In a message to members, APA said that the freeze will preserve the benefits and require AA to continue to fund the plan.

American Spokesman Bruce Hicks said the airline was also happy with the arrangement. Hicks said that the company has from the beginning sought a solution that "maintains the freeze of our pilot defined benefit plan." Hick said that negotiations with all groups, including the Pension Benefit Guaranty Corp. "Publication of the Treasury Department's final regulation moves us one step closer to that goal," he said.

FMI: www.alliedpilots.org, www.aa.com, www.treasury.gov