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
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 non-union
"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 matter."
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 <AAL.O>.
As part of its reorganization, the company sought to renegotiate its
collective bargaining agreements with various unions for American
After having reached deals with unions for its current employees,
AMR turned its focus toward benefits provided to its approximately
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
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"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 said.
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 Adler)
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