In the last decade, pilots at virtually all other network carriers lost their pensions in bankruptcy – they were either turned over to the PBGC or were frozen. Continental and Northwest froze their defined benefit plans; while Delta, United and US Airways had theirs terminated under PBGC.
Today, American continues to provide the richest pilot retirement plan in the industry. This is done through a combination of the Fixed Income Plan (the A Plan) and the Variable Income Plan (the B Plan) which provide an option to pay out benefits in lump sum upon retirement. On average, an American career pilot retires with lump sum pension benefits worth between $1 million and $3 million.
Industry Pilot Retirement Benefit Comparison |
|||||
|---|---|---|---|---|---|
Defined Benefit Plan (DB) |
Defined Contribution Plan (DC) |
401(k) |
|||
| Airline | Plan |
Status |
Plan |
Company Contribution |
Company Match |
| AA | Yes |
Active |
Yes |
11% |
0% |
| CO | Frozen |
5/31/2005 |
Yes |
12.75% + profit sharing |
0% + Variable |
| DL | Terminated - PBGC |
9/2/2006 |
Yes |
13% |
0% |
| NW | Frozen |
1/31/2006 |
No |
10% |
6% Guaranteed |
| UA | Terminated - PBGC |
5/1/2005 |
Yes |
16% |
0% |
| US | Terminated - PBGC |
3/31/2005 |
Yes - East Only |
10% |
East 0%, West 10% Guaranteed |
| AS | Yes |
Active |
Yes |
3% |
-- |
| WN | No |
-- |
Yes |
9.3% + profit sharing |
-- |
| FL | No |
-- |
Yes |
10.5% |
-- |
| B6 | No |
-- |
Yes |
10% |
-- |
Source: Aircon
Data current as of November 2011
DL defined contribution includes 9% to DC plan and 2% to Savings Thrift plan. DC contribution will increase 10% in 2010.
DL/NW joint agreement will increase DC plan contributions to 11% in 2011 and 12% in 2012.
The company recognizes the importance of retirement benefits to pilots. Pension protection was a primary goal of negotiations in 2003 and American continues to provide the best-funded, most lucrative pilot retirement plan in the industry. Maintaining these benefits remains our goal in negotiations.
However, our annual pension funding requirements are extraordinary – we’ll make payments of approximately $520 million in 2011. To protect these benefits, the company offered the APA two options for pilot retirement benefits. Both of these approaches continue to offer rich retirement programs to pilots, while beginning to transition the company to a more sustainable program.
See Option A and Option B for more details on the company’s current retirement plan proposals.
