- The Washington Times - Sunday, October 16, 2005

ATLANTA (AP) — Delta Air Lines Inc. and its pilots are about to battle in court over a key issue in the carrier’s bankruptcy case: pensions.

The pilots want the nation’s third-largest carrier to continue making minimum contributions to their pension plan and certain payments to higher-paid retirees, while the Atlanta airline vows it will not do either unless a judge forces its hand.

Attorneys for both sides will argue the issue at a bankruptcy court hearing in New York today.

Many observers wonder whether Delta will terminate its pension plan altogether if it doesn’t get relief from Congress.

“Anybody that is not worried would have to be a very cold-blooded person,” said Dean Booth, an attorney for the pilots.

The pilots argue that their contract with Delta requires the airline to continue making the pension payments until it applies for and receives permission from the bankruptcy court to void the contract, which it has not done.

The company argues that the payments are unsecured, pre-petition claims against the airline and, therefore, Delta does not have to make the payments a priority during its reorganization.

“Accordingly, in its first-day wages motion, Delta did not seek authority to make these payments and does not intend to make these payments,” the airline says in court papers.

The two sides were saying little in advance of the hearing. One of Delta’s chief bankruptcy attorneys, Marshall Huebner, did not return a call seeking comment. Company spokeswoman Chris Kelly declined to comment on Delta’s long-term intention for the pilot pension plan, but she said the airline thinks the recent decisions about pension contributions were necessary to help Delta recover.

“We are fighting hard together to save this company, and many painful sacrifices will be required from a wide range of stakeholders in order to accomplish that goal,” Ms. Kelly said.

She said: “Any impact on this select group of high-income Delta people is a regrettable but necessary component of a com-prehensive restructuring plan built on well-established law and the principle of shared sacrifice.”

Delta wants to be able to spread its pension payments over 25 years. Some plans in Congress would require the payments to be spread over 14 years, something Delta said it would not be able to afford.

Delta pilots with enough years of service can elect to retire at age 50 and receive half their pension benefit in a lump sum and the rest in an annuity later. Many elected to do so in the months leading up to Delta’s bankruptcy filing on Sept. 14, putting a strain on the $1.89 billion in assets in the plan.

According to court papers filed in preparation for today’s hearing, the pilot pension plan has paid out roughly $970 million in lump sums to 1,190 pilots in the past 12 months. The average lump sum was $760,000.

Separately, Delta has said it is willing to use the bankruptcy court to impose $325 million in concessions it is seeking from its pilots unless the two sides can come to an agreement on their own.

Delta has not filed a court motion to impose the pilot cuts. The pilots union plans to meet today to discuss the issue.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide