Today American Airlines parent company AMR told employee unions that it will cut up to 14,000 jobs in an effort to lower labour costs and get out of bankruptcy.It’s a move we’ve seen before with airlines like Continental and United.
It lays the groundwork for a battle between management and American’s union employees, which make up 80 per cent of the company.
The even bigger battle, though, will likely come with the federal government, which is launching a preemptive attack against American’s plans to terminate employee pension plans.
Officials at the federal agency that would be forced to absorb those pension plans are already preparing to block such a move and have filed a $91 million lien on American’s assets, The New York Times reported Tuesday:
“Joshua Gotbaum, director of the Pension Benefit Guaranty Corporation, said he was hoping to get out in front of any such move by the airline. The agency is already operating with a $23 billion deficit and has said it would bear an additional $9 billion loss if American terminated all four of its employees’ plans, which cover 130,000 people.”
Gotbaum has publically criticised American for weeks, citing that other airlines had gotten out of bankruptcy without terminating employee pensions.
NOW WATCH: Ideas videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.