Judge: American can't end retiree benefits yet

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

American 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, for the right to immediately eliminate retiree benefits for former pilots, flight attendants and other union workers. Lane granted AMR's request for a group of nonunion workers.

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 impact 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 last December as American Airlines Group after merging with US Airways. Lane approved that Chapter 11 reorganization plan but had delayed ruling on the AMR lawsuit against the retirees' committee.

The lawsuit is case 12-01744, filed in U.S. District Court in the Southern District of New York.

Follow David Koenig on Twitter @airlinewriter