| NEW YORK, April 18
NEW YORK, April 18 A U.S. bankruptcy judge
largely declined on Friday to rule that former American Airlines
parent company AMR Corp had a unilateral right to terminate
benefits for nearly 47,000 retirees.
U.S. Bankruptcy Judge Sean Lane in New York rejected a
motion AMR made in 2012 for a ruling holding that the health and
welfare benefits it provided retirees had not vested and could
be unilaterally modified.
Lane did rule for AMR with regard to some employees, but his
ruling was a setback in AMR's bid to shift the program's costs
from the company to the retirees, which included both union and
"American will review his ruling and consider next steps
related to the retiree health and life insurance benefits," said
Casey Norton, a spokesman for American Airlines. "We always
remain open to productive discussions to finally resolve this
AMR filed for Chapter 11 bankruptcy protection in 2011,
seeking to cut more than $1 billion a year in labor costs.
The company emerged from bankruptcy in November 2013 through
a merger with US Airways Group Inc. The combined company is now
called American Airlines Group Inc.
As part of its reorganization, the company sought to
renegotiate its collective bargaining agreements with various
unions for American Airlines employees.
After having reached deals with unions for its current
employees, AMR turned its focus toward benefits provided to its
approximately 46,930 retirees.
Though Lane ruled in favor of AMR with regard to some
retirees who were non-union or management, he largely declined
to rule for the company.
"The relevant documents contain language reasonably
susceptible to interpretation as a promise to vest benefits and
lack language categorically reserving the plaintiffs' right to
terminate their contributions to the retiree benefits," Lane
As a result of the ruling, AMR will now need to proceed to
trial should it continue to seek a ruling holding that it has
the right to terminate the retirees' benefits.
Catherine Steege, a lawyer with the law firm Jenner & Block
representing the official committee for retirees, said she hoped
in light of the ruling the company would "reconsider its efforts
to try to take away benefits from the retirees."
The case is In re: AMR Corporation, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.
(Reporting by Nate Raymond in New York; Editing by Leslie