American Airlines will square off against its most senior pilots Wednesday in U.S. Bankruptcy Court as they fight over whether American should be allowed to kill the lump-sum option for retiring pilots.
The pilots’ A Plan, a defined-benefit plan, gives pilots the option to take their pension as a lump sum rather than as an annuity. That option has been on hold since American filed for bankruptcy Nov. 29, but would again be available when American emerges from bankruptcy.
American has asked U.S. Bankruptcy Judge Sean Lane for the right to kill that option. The carrier said it fears that too many senior pilots will quickly retire if they regain that right when American emerges from bankruptcy, expected in 2013.
That would leave the company with a shortage of pilots until it can train their replacements, their replacements’ replacements and so on, including the hiring and training of new pilots, American has argued.