The U.S. government’s Pension Benefit Guaranty Corp. (PGBC) believes AMR Corp. will be able to afford its recent decision to freeze, rather than terminate, its traditional pensions for non-pilot groups without additional cost to the airline.

This conclusion, provided exclusively to Aviation Week, is in contrast to AMR’s position, which expects to raise new capital to cover obligations arising from freezing its defined benefit pension plans. Before that March 7 decision, AMR had planned to terminate those pension plans and pass the payment obligations to the PBGC.

AMR had also calculated that its labor costs would incur an $800 million annual charge if it retained the defined benefit pensions.

The PBGC played a major role in negotiating AMR’s revised position, as noted by the operator’s Senior VP-Human Resources Jeff Brundage in a letter to employees. “While we still need to work with certain stakeholders and, in some cases, secure court approval, I’m pleased to report that in working with the unsecured creditors committee and the PBGC, we’ve developed a solution that would allow us to pursue a freeze of our defined benefit pension plans for non-pilot employees instead of seeking termination,” Brundage said in his March 7 letter.

However, he added that “[f]reezing instead of terminating these plans of course would mean we will have significantly larger pension costs than contemplated in our business plan. While we still must achieve the $1.25 billion in employee cost savings outlined in our business plan, we do not plan to increase that employee cost-savings target. Instead, as part of our plan of reorganization, we intend to seek new capital at the appropriate time to cover the incremental annual costs of funding the frozen pension plans and to help fund the pension liabilities we will continue to have on our balance sheet.

“Our ability to attract new capital on terms that will give us the future flexibility we need requires that we achieve the $1.25 billion of employee cost savings as quickly as possible. We must clearly demonstrate to other stakeholders—and now potential investors—that we have addressed our cost challenges and can emerge from Chapter 11 as a viable, well-capitalized airline.”

Aviation Week on the sidelines of a news conference highlighting the defined benefit pension plans asked host PBGC Director Josh Gotbaum how raising this new debt would affect the airline’s Chapter 11 restructuring. After identifying the necessity of debt in any company’s operations, Gotbaum directed the question to his staff for clarification.

“Based on its business plan, which contemplates retaining its pension plans, we do not believe AMR needs to raise additional capital to reorganize and exit Chapter 11,” the organization said.

There are caveats to this statement, notably PBGC’s duty to withhold confidential information it accesses as a member of the airline’s unsecured creditors committee. The statement also is contingent on AMR’s ongoing negotiations with its unions, which recently came under the auspices of the company’s bankruptcy court through a process governed by U.S. bankruptcy laws that allows the court to decide on new work rules.

Because of these restrictions, PBGC cannot elaborate on its conclusion. AMR, meanwhile, stands by its previous statement.