Final answer:
In 2012, American Airlines approached the biggest pension default in U.S. history when they fell short of meeting pension obligations.
Step-by-step explanation:
There are several factors that contributed to American Airlines' pension default:
1. Financial difficulties: American Airlines was facing financial challenges during that time, including high operating costs and intense competition in the airline industry. These financial pressures made it difficult for the company to allocate sufficient funds towards its pension obligations.
2. Economic downturn: The global economic recession in the late 2000s had a significant impact on the airline industry. The decline in air travel demand and increased fuel prices added further strain to American Airlines' financial situation, making it even more challenging to meet pension obligations.
3. Underfunding: It is possible that American Airlines had been underfunding its pension plans for an extended period. This means that the company did not contribute enough money into the pension fund to cover future retirement benefits. This underfunding, combined with the financial difficulties and economic downturn, ultimately led to the pension default.
4. Bankruptcy filing: In order to address its financial challenges, American Airlines filed for bankruptcy protection in November 2011. As part of the bankruptcy process, the company sought to restructure its operations and reduce costs, including its pension obligations.