A week after retired American executives, managers and support staff members learned the company is cutting medical benefits for retirees age 65 and older on Jan. 1, many are mad, distressed and disillusioned.

“Now, you know you can’t trust them at all,” said Dean Hodson, a 38-year veteran at American. He retired in 2003 as lead test equipment engineer for aircraft components at American’s Tulsa Maintenance & Engineering Center.

“They didn’t enforce this on the union people, who could fight back,” Hodson said. “We have no way of battling back on this.”

American notified retired executives and management employees during the past two weeks that the company won’t sponsor the Retiree Standard Medical Plan option for retirees age 65 and older, effective Jan. 1.

In letters mailed to the affected retirees, American said the rising cost of health care and American’s higher costs relative to its airline competitors made the changes necessary.

The retiree medical plan cuts do not affect retired members of American’s unions, the Transport Workers Union, the Allied Pilots Association and the Association of Professional Flight Attendants.

Many American retirees, as well as professors at two of the nation’s premier business schools, said the company’s actions are legally defensible but ethically bankrupt.

“The whole thing is not illegal, it’s unethical,” said a retired 34-year executive employee of the company. “I took an early retirement incentive in 2004 because I knew I would have retiree medical benefits. I turn 65 in November. My wife is 59. After Jan. 1, she won’t be covered by retiree medical benefits. If she has to go to the hospital and has to have surgery, she could come out with a $100,000 medical bill and we would lose the house, which I just got through paying for.”

Robert Rasberry is assistant professor of management organization at Southern Methodist University’s Cox School of Business in Dallas. He teaches classes in ethics and social responsibility.

Rasberry was asked if American’s actions are ethical.

“No, what American did is not ethical because we think of ethics as standards of right or wrong, things we should and should not do — standards of honesty, compassion and loyalty,” Rasberry said.

“The ethical thing for the company to do is to pay the retirees what they said they would do under the agreement.”

Thomas Donaldson said American’s retiree medical cuts are reminiscent of General Motors’ actions a year ago.

Donaldson is author of “Ties That Bind: A Social Contract Approach to Business Ethics.” He is Mark O. Winkelman Professor of Legal Studies and Business Ethics at Wharton School of the University of Pennsylvania.

“My wife’s 83-year-old father was one of the victims,” Donaldson said. “To my mind, these should be deeply embarrassing events for Americans and American businesses. They highlight the urgent need for dramatic reform in our national health care policies.” American spokeswoman Missy Latham said the company has had to make tough decisions to position the company to compete for the long term.

“As with any corporate offering, we have always maintained the ability to modify our benefits at any time, as needed,” Latham said. “We remain one of only two airlines that continue to provide our retirees over the age of 65 with access to health insurance.”

Retirees, however, have found by comparison shopping that the UnitedHealthcare Medical Solutions supplemental Medicare coverage promoted by American is no better than the market rates offered by other health care insurance providers.

Hodson said as a former management employee he understands the need to cut costs. But better solutions were available, such as asking retirees for additional contributions to maintain retiree medical coverage, he said.

“Why did they choose such a heartless way of doing this?” Hodson said. “It’s not the American Airlines I worked for. The American I worked for was not this cold.”

SMU’s Rasberry said American’s latest move reminds him of the backlash that engulfed former CEO Don Carty in 2003.

In April that year, American teetered on the edge of bankruptcy, its cash reserves dwindling as it lost $5 million a day.

In a last ditch agreement before the company’s lawyers filed a Chapter 11 petition in New York, American’s unions agreed to $1.8 billion a year in wage and benefit concessions.

After the unions ratified the concessions, AMR Corp., American’s parent, disclosed in a filing with the Securities and Exchange Commission that the company set up a trust months earlier that would protect executive pensions and benefits from creditors in the event of a bankruptcy.

Having lost all credibility, Carty resigned as CEO.

“I don’t think employees have trusted management at American for years,” Rasberry said. “This (retiree medical issue) is going to be the latest nail in the coffin.”