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American Airlines, the world’s largest after its merger this year with US Airways, is shopping proposed language for an amendment to a 2006 law that would reduce its near-term obligations to its pension funds, the Dallas Morning News reported today. The proposed changes would amend the Pension Protection Act of 2006. Congress included special terms for the then-struggling airline industry to help prevent airlines from defaulting on billions of dollars in pension obligations. Those pensions are guaranteed by the taxpayer-funded Pension Benefit Guaranty Corp., and lawmakers were eager to avoid a default. But five years out from 9/11, many airlines were still struggling. Delta, for instance, had filed bankruptcy in 2005 and profits were down throughout the industry. Delta and some of its competitors had already frozen pension benefits for their workers. The law allowed those companies to defer some of the annual contributions they were required to make to the pension funds for up to 17 years. It meant that the companies could in the meantime use billions of dollars in cash to pay their bills, rather than sock the funds away for future retirees. Americans’ obligations under the law were different. Five years ahead of its own bankruptcy in 2011, it was doing better than many of its competitors, and it had not yet frozen its workers’ pension benefits.

Just two days after flight attendants at American Airlines Group Inc. narrowly rejected a proposed new contract, the company made a proposal to its pilots, promising the highest pay rates among the carrier’s big rivals, the Wall Street Journal reported today. The Allied Pilots Association, the bargaining agent for about 10,000 American pilots and 5,000 US Airways aviators, said its 22-member board of directors is scheduled to meet for three days this week to evaluate the offer. The union board could accept the offer, ask for more time to bargain, or put the deal out to a membership vote. A spokesman for the union said he couldn’t comment on what would occur if management’s offer is voted down, either at the board level or by the entire group. The airline’s combined 24,000 flight attendants shot down — by a scant 16 votes — a five-year contract that would have raised their pay to the top of the industry scale. By previous agreement, American and the Association of Professional Flight Attendants union will take part in arbitration, with a three-member panel working to apportion the value of contract improvements that are capped at $111 million a year over existing, separate labor agreements, bringing them to the average of what attendants at Delta Air Lines Inc. and the still-separate Continental and United subsidiaries of United Continental Holdings Inc. receive. The rejected deal would have provided $193 million more in annual value.

American Airlines Group Inc. will pay its first dividend since 1980 and repurchase $1 billion in stock, matching a buyback by United Airlines’ parent as the once-struggling industry returns more cash to investors, Bloomberg reported yesterday. The 10-cents-a-share quarterly payout came as the 2013 merger with US Airways has been delivering financial benefits faster than the company expected. United Continental Holdings Inc. unveiled its plan while returning to profit after recording the only first-quarter loss among its U.S. peers. Stockholder rewards from American and United underscored the turnabout among U.S. carriers after bankruptcies, consolidation and nine years of losses through 2009 that totaled $58 billion. Chicago-based United left court protection in 2006, and American did so in December when it merged with US Airways.

A federal judge on Tuesday approved nearly $400 million in fees and expenses owed to the professionals responsible for guiding American Airlines through its chapter 11 restructuring, the Wall Street Journal reported yesterday. During a hearing at the U.S. Bankruptcy Court in Manhattan, Judge Sean Lane signed off on a recommendation from a fee examiner that proposed paying $16.3 million in expenses and $371.7 million in fees to 47 professional firms, including lawyers, accountants, consultants and other advisers. The examiner, attorney Robert Keach, had been tasked with keeping costs down and worked with the professionals to trim several million dollars from the total bill, according to court filings. Judge Lane praised Keach's work, noting that the case had presented many complicated and challenging legal issues and that the fees and expenses also covered professional work related to the airline's ordinary course of business.

A fee examiner tasked with keeping costs down in the American Airlines bankruptcy recommended this week that a court approve nearly $400 million in fees and expenses earned by professionals who he said engineered "perhaps the most efficient airline reorganization case on record,” the Wall Street Journal reported today. Robert Keach, an attorney from Maine, made the request in a series of filings on Tuesday in U.S. Bankruptcy Court in Manhattan. Keach recommended paying $371.7 million in fees and $16.3 million in expenses to 47 professional firms, including lawyers, accountants, aircraft consultants and other advisers. A handful of firms who submitted fees after a deadline will be included in separate requests, he said. The final fee and expense tallies cover work completed from the November 2011 inception of former American Airlines parent AMR Corp.'s chapter 11 case through the approval of its bankruptcy-exit plan 23 months later. American Airlines exited bankruptcy through a historic merger with US Airways Group Inc. — initially opposed and later cleared by the Justice Department — that created the world's largest airline. American also used its bankruptcy proceeding to negotiate deep concessions from its main labor unions, ultimately cutting about $1 billion in annual labor costs. Nancy Rapoport, a bankruptcy law professor at University of Nevada at Las Vegas who has served as a fee examiner in large chapter 11 cases, said the appointment of Keach at the beginning of the case was crucial to keeping costs down. "These fees would have been way higher" if Keach hadn't created ground rules governing what could and couldn't be charged, Rapoport said.

The union representing Malaysia Airlines employees is calling for the resignation of the airline’s chief executive, saying that new management is needed to revive the beleaguered flag carrier, the Associated Press reported yesterday. The union’s secretary, Mohamad Jabbarullah Abdul Kadir, said yesterday that the state-owned airline has been mired in losses for four straight years and is now grappling with the aftermath of the Flight 370 tragedy. The jet disappeared on March 8 with 239 people on board. He said that the government and airline have done their best in handling the tragedy, but CEO Ahmad Jauhari Yahya and his team have failed to show leadership in charting the airline’s future. Mohamad Jabbarullah said that staff frustration was not solely due to the plane crisis, but had built up over the years because of management’s failure to engage employees and address internal problems. Bankruptcy isn’t an option for the airline, which has 19,500 staff worldwide, he said. The union’s demand will add to pressures on Malaysia Airlines, which is already struggling to repair its image after Flight 370 vanished en route from Kuala Lumpur to Beijing.

A federal judge in Washington, D.C., on Friday approved a settlement between the U.S. Department of Justice and American Airlines and US Airways that will allow the airlines to proceed with their $11 billion merger, the Legal Times reported on Friday. The agreement will require the companies to give up takeoff and landing slots and gates at several major airports. The slots would be sold to low-cost carriers approved by the government. “The United States has provided a reasonable basis for concluding that the settlement will mitigate the anticompetitive effects of combining two of the remaining legacy airlines,” U.S. District Judge Colleen Kollar-Kotelly wrote.

The Supreme Court yesterday declined to hear a dispute from the AMR Corp. bankruptcy over whether the former American Airlines parent owes its bondholders a penalty fee in connection with the prepayment of more than $1.3 billion in debt, Dow Jones Daily Bankruptcy Review reported today. The high court's decision not to take the case means a controversial topic in corporate restructurings, so-called make-whole payments, won't get its day in court. However, restructuring experts have said that the case is very specific to AMR's bankruptcy and likely wouldn't have invited a ruling on the general allowance of make-whole payments.

Bankruptcy Judge Sean H. Lane ruled that former American Airlines parent AMR Corp. doesn't have the unilateral right to terminate benefits to about 46,930 retirees, Dow Jones Daily Bankruptcy Review reported today. Judge Lane on Thursday denied AMR's request, brought during its chapter 11 case, for a summary judgment that it could unilaterally modify the health and welfare benefits it offered its retirees because its benefit programs "lack language categorically reserving" its right to do so. AMR had sought to shift the cost of the benefits to its retirees, who include union and nonunion members.

A top airline pilot union has signed a deal to end its dispute with former Trans World Airlines pilots who had accused the union of poorly representing them during their integration into American Airlines operations, which bought Trans World Airlines out of bankruptcy in 2001, Dow Jones Daily Bankruptcy Review reported today. The Air Line Pilots Association has agreed to pay part of a $53 million settlement reach earlier this week with TWA's roughly 2,300 former pilots, who had sued the union over the seniority they got as new American Airlines pilots.