American Airlines’ bid to end benefits for many retirees is rejected

DALLAS — A federal judge has rejected an attempt by American Airlines to quickly cut off benefits for many of its retirees.

The airline wants retirees who wish to keep their benefits to pay all the cost. Now the dispute could go to negotiations or a trial.

On Friday, U.S. Bankruptcy Court Judge Sean Lane in New York rejected a request made by American’s former parent, AMR Corp., for the right to immediately eliminate retiree benefits for former pilots, flight attendants and other union workers.

The judge granted AMR’s request for a group of nonunion workers, and American was left to ponder its next move.

“American will review his ruling and consider next steps related to the retiree health and life insurance benefits,” American spokesman Casey Norton said in an emailed statement. “We always remain open to productive discussions to finally resolve this matter.”

Chicago lawyers for a committee representing the retirees did not immediately return phone and email requests for comment.

American pays about $10 million a month in health and life insurance benefits for retirees. The financial effect of the judge’s decision wasn’t immediately clear, however, because of the mixed ruling and the fact that the eventual outcome is uncertain.

AMR argued that it could change health and life insurance benefits for retirees even though the company didn’t reserve the right to do so in the language of the benefit plans.

AMR filed for bankruptcy protection in November 2011 and emerged in December as American Airlines Group Inc. after merging with US Airways. Lane approved that Chapter 11 reorganization plan but had delayed ruling on the AMR lawsuit against the retirees’ committee.