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"It's hard to see a carrot right now," he said, "but you have to convince them that this is part of a plan to return to profits and secure jobs." The company also wants union approval to drop its traditional pension plans, which cover 130,000 employees and retirees. It would replace them with 401(k)-type plans under which the company contributes to workers' retirement accounts. The pension plans were once standard in the airline industry. AMR's are underfunded by billions of dollars and the company said on a new website Wednesday that it could no longer afford them. This week, the U.S. Pension Benefit Guaranty Corp. slapped liens on $91 million in AMR property after the company paid only $6.5 million of a required $100 million contribution to the plans. PBGC Director Joshua Gotbaum said that before American "takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative." He said the company had failed to provide even basic financial details. American said the cost of traditional pensions and retiree health benefits saddled AMR with higher labor costs than its rivals. Through the first nine months of 2011, labor was 29 percent of operating costs at AMR compared with 22 percent at United and 20 percent at Delta. Horton said AMR also plans to go ahead with orders to buy hundreds of new aircraft to replace older gas-guzzlers. That would cut fuel use
-- high fuel costs have been a major drag on American and other airlines. The bankruptcy judge hasn't approved those new orders, but he has allowed the company to take delivery of some new jets. American plans to increase flights in New York, Los Angeles, Chicago, Dallas and Miami by 20 percent over the next five years to raise revenue, Horton said. AMR, which barely avoided bankruptcy in 2003, is the latest of several large U.S. airlines to go through Chapter 11 in an effort to reduce costs and debt. United, Delta and US Airways did so in the past decade, and Continental
-- now part of United -- in the 1990s.
[Associated
Press;
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