'Skeptical That Stripping Employee Benefits Will Ensure Long-Term Success'

The Allied Pilots Association (APA), collective bargaining agent for the 13,500 pilots of American Airlines, expressed its view of the situation at United Airlines as that carrier proceeded with plans to terminate its four employee pension plans.

"The bankruptcy process that began in December 2002 has been extremely difficult for the employees of United Airlines, and the Federal Bankruptcy Court's ruling permitting that carrier's management to proceed with terminating its employee pension plans marks the most painful chapter yet," said APA President Captain Ralph Hunter. "On behalf of the 13,500 pilots of American Airlines, I want to express my heartfelt sympathy for every active and retired employee at United Airlines affected by this terrible turn of events."

Hunter noted that pension preservation has been one of APA's highest priorities during the prolonged industry downturn that began with the September 11 terrorist attacks more than three and a half years ago.

On March 16, 2005, all three labor unions at American Airlines -- APA, the Association of Professional Flight Attendants and the Transport Workers Union -- joined with American Airlines management to issue a joint statement regarding defined benefit pension plan legislation that outlines a common position. Congress has been debating pension reform, and legislation may emerge from the current session.

According to Hunter, American Airlines provides concrete evidence that it's feasible to continue funding defined-benefit plans in the current environment.

"Under the worst economic conditions in our industry's history, American Airlines has been able to fulfill its pension funding obligations," he said. "And as we recently reminded lawmakers on Capitol Hill in our joint statement, we believe that companies that have acted responsibly should be permitted to continue working collaboratively with their employees to determine the future of their retirement benefits, rather than Congress or the judiciary deciding for them."

Hunter also questioned predictions that United Airlines' decision to terminate its employee pensions could create a domino effect at other carriers.

"We are highly skeptical that stripping employees of their hard-earned negotiated benefits, either through legislation or in Federal Bankruptcy Court, will serve to ensure any organization's long-term success," he said. "Moreover, companies that have recently opted to replace their defined-benefit plans with defined-contribution plans may actually find themselves with higher pension-related expenses in the future."

Founded in 1963, APA is headquartered in Fort Worth, Texas. There are currently 2,890 American Airlines pilots on furlough. The furloughs began shortly after the September 11, 2001 attacks. Also, several hundred American Airlines pilots are on full-time military leave of absence serving in the armed forces.

FMI: www.alliedpilots.org