AMR Corp., the parent of American Airlines, is conducting a study to explore new ways to match its pension liabilities and that includes using interest-rate swaps. Its USD3.5 billion defined benefit pension plan has a 40% allocation to long-duration bonds, which AMR wants to reduce to free up cash for additional private equity investments, said Bill Quinn, president of investment services.
The review began this quarter and may be completed during the first quarter. "We hope to fine tune [the portfolio] to decide how we should be hedged in any point of time," he explained. AMR invests 40% in long duration bonds, 25% in domestic equity, 22% in international equity, 6% in emerging market equity and 7% in private equity.
