Surprise, surprise.

AMR’s American Airlines and Continental Airlines will be able to cut their employee pension contributions by $2 billion under a provision that has apparently been written into the House version of an Iraq war spending bill.

The bill, approved by the House of Representatives Thursday night, would permit the airlines to assume an 8.25% annual discount rate in calculating the value of their pension obligations, rather than the 6% they use now.

Higher discount rates lower the pension obligation and pension expense.

This effort goes back to the pension legislation that was approved in 2006 that allowed both Delta and Northwest use a higher rate of 8.85%. While both AMR and Continental benefited from the legislation, in that both airlines were given extensions of time in which to fund their pension requirements, the discount rate for both was not raised.

Bloomberg reported tonight that  AMR and Continental aren’t named specifically in the Iraq bill. The proposal cites carriers with “non-frozen pension plans.” American and Continental didn’t freeze all their defined-benefit pension plans from accruing future liability, so they didn’t qualify for the higher rate extended to Delta and Northwest.



Other, smaller carriers with unfrozen defined-benefit pension plans also would qualify for the higher rate, including Alaska Air Group.

This bill now moves to the Senate, where earlier this evening their version of the Iraq funding bill was passed.

Tickers: (NYSE:AMR), (NYSE: CAL)