Delta Air Lines to Dump Pilot's Pension Plan on Monday

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More obligations for the tax payers as yet another company dumps their pension plans on the government in order to relieve themselves of massive debt. Delta is not the first airline to do this. US Airways (old) and United have done this.
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Delta Air Lines Inc. will file a request Monday to terminate its pilots' pension plan, the company's chief executive said Friday. But the nation's third-largest carrier still holds out hope pension reform will save other employees' retirement plans.

In a letter to Sen. Johnny Isakson, R-Ga., that also was sent to other members of Congress, Delta CEO Gerald Grinstein said the airline will ask that the pilots' pension be terminated effective Sept. 2.

"The unfortunate reality is that even if a pension reform bill containing airline relief passes, unless the pilot plan is terminated, Delta cannot successfully restructure and emerge from bankruptcy," Grinstein wrote.

He added that the relief Delta is seeking is necessary "if we are to preserve tens of thousands of jobs and provide ongoing service to tens of millions of customers in local communities around the world."

Once the notice is made to the Pension Benefit Guaranty Corp. on Monday, the company will seek approval by a judge. There probably will be objections, though the pilots, for their part, have agreed not to object.

In a memo to pilots after the letter went out, union spokeswoman Kelly Collins said only that the union would address pilots' questions at a later date. Reached by telephone, Collins declined further comment.

As part of a recently approved $280-million-a-year concessions deal agreed to by the pilots, Delta has promised the pilots a $650 million note -- essentially a debt claim -- in the event the pension is terminated. Delta also has promised the pilots a $2.1 billion unsecured claim. The PBGC has argued that money belongs to the agency, a claim the company has rejected.

The agency is concerned because if a pension plan is terminated without sufficient assets to pay all of its promised benefits, the PBGC becomes trustee of the plan and is responsible for paying participants their pension benefits up to a certain limit. Delta's pilots' pension plan is significantly underfunded.

Delta has lost more than $14 billion in the last five years. It filed for bankruptcy last September and since then it has cut more jobs, rejected aircraft leases and reaped cost savings through pay cuts for employees.

STL Today.com

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