Dennis Miller
What about my Member
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- Mar 13, 2003
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Bankruptcy Court Grants Delta Motion for Court Approval of Termination of Pilot Pension Plan
ATLANTA, Sept. 5, 2006 (PRIMEZONE) -- Delta Air Lines today announced that the Judge overseeing its Chapter 11 restructuring granted its motion seeking bankruptcy court approval to terminate its pilot defined benefit pension plan.
Because the Pension Benefit Guaranty Corp. (PBGC), the federal agency charged with insuring the nation's pension plans, has the responsibility for plan termination under ERISA, Delta now must secure the pension agency's approval before the pilot plan can be terminated. While a timetable to attempt to secure PBGC approval has not yet been established, Delta plans to establish September 2, 2006, as the effective date of termination of the pilot plan.
Judge Adlai Hardin issued his ruling today following the carrier's advising the bankruptcy court that over the weekend the last remaining group opposing termination of the pilot plan withdrew its objection.
The group, consisting of about 100 Delta retired pilots known as DP2, which until now had been objecting to the termination, joined the PBGC, Delta's Unsecured Creditor's Committee, the Air Line Pilots Association (ALPA), and another group of approximately 2,850 retired Delta pilots known as DP3, Inc., in not opposing the termination of the pilot plan.
``The Court's order, together with the broad-based consensus not to oppose the termination of the pilot pension plan, is significant and validates the company's need to take this course of action in order to survive. It is a move Delta does not take lightly. It is an unfortunate but necessary step in Delta's restructuring, and we regret the impact of termination on active and retired pilots,'' said Edward H. Bastian, Delta's executive vice president, chief financial officer and head of the company's in-court restructuring efforts. In connection with the DP2 group's decision to withdraw its objection, Delta will pay DP2 approximately $500,000 on account of the pilot retiree group's legal fees and other expenses.
Delta has said that while the Airline Relief Act, signed into law August 17, 2006, would give the company the opportunity to preserve the defined benefit pension plan for its approximately 91,000 active and retired flight attendant and ground employees, the legislation's airline provisions did not provide the same opportunity for its pilot plan because of the plan's key features and unsupportable costs.
Under the terms of Delta's pilot defined benefit pension plan, pilots may retire at age 50 and take out half of their total retirement benefit in a lump sum payment and receive the rest as an annuity.
``Unfortunately, the Airline Relief Act provisions provide no relief from the unaffordable costs resulting from the pilot plan's lump sum feature -- expected to exceed more than $1 billion in the near term alone -- that would confront Delta upon emergence from bankruptcy and beyond were the pilot plan not terminated,'' said Bastian.
The company has estimated that even with the termination of the pilot plan, current Delta pilot retirees will receive on average approximately $75,200 in annualized pension benefits, including the value of the lump sum. Delta said it is on track to realize more than two-thirds of its business plan's approximately $3 billion in annual financial improvements by the end of this year, and ``barring any unforeseen disruptions,'' plans to emerge from bankruptcy by mid-2007.
ATLANTA, Sept. 5, 2006 (PRIMEZONE) -- Delta Air Lines today announced that the Judge overseeing its Chapter 11 restructuring granted its motion seeking bankruptcy court approval to terminate its pilot defined benefit pension plan.
Because the Pension Benefit Guaranty Corp. (PBGC), the federal agency charged with insuring the nation's pension plans, has the responsibility for plan termination under ERISA, Delta now must secure the pension agency's approval before the pilot plan can be terminated. While a timetable to attempt to secure PBGC approval has not yet been established, Delta plans to establish September 2, 2006, as the effective date of termination of the pilot plan.
Judge Adlai Hardin issued his ruling today following the carrier's advising the bankruptcy court that over the weekend the last remaining group opposing termination of the pilot plan withdrew its objection.
The group, consisting of about 100 Delta retired pilots known as DP2, which until now had been objecting to the termination, joined the PBGC, Delta's Unsecured Creditor's Committee, the Air Line Pilots Association (ALPA), and another group of approximately 2,850 retired Delta pilots known as DP3, Inc., in not opposing the termination of the pilot plan.
``The Court's order, together with the broad-based consensus not to oppose the termination of the pilot pension plan, is significant and validates the company's need to take this course of action in order to survive. It is a move Delta does not take lightly. It is an unfortunate but necessary step in Delta's restructuring, and we regret the impact of termination on active and retired pilots,'' said Edward H. Bastian, Delta's executive vice president, chief financial officer and head of the company's in-court restructuring efforts. In connection with the DP2 group's decision to withdraw its objection, Delta will pay DP2 approximately $500,000 on account of the pilot retiree group's legal fees and other expenses.
Delta has said that while the Airline Relief Act, signed into law August 17, 2006, would give the company the opportunity to preserve the defined benefit pension plan for its approximately 91,000 active and retired flight attendant and ground employees, the legislation's airline provisions did not provide the same opportunity for its pilot plan because of the plan's key features and unsupportable costs.
Under the terms of Delta's pilot defined benefit pension plan, pilots may retire at age 50 and take out half of their total retirement benefit in a lump sum payment and receive the rest as an annuity.
``Unfortunately, the Airline Relief Act provisions provide no relief from the unaffordable costs resulting from the pilot plan's lump sum feature -- expected to exceed more than $1 billion in the near term alone -- that would confront Delta upon emergence from bankruptcy and beyond were the pilot plan not terminated,'' said Bastian.
The company has estimated that even with the termination of the pilot plan, current Delta pilot retirees will receive on average approximately $75,200 in annualized pension benefits, including the value of the lump sum. Delta said it is on track to realize more than two-thirds of its business plan's approximately $3 billion in annual financial improvements by the end of this year, and ``barring any unforeseen disruptions,'' plans to emerge from bankruptcy by mid-2007.
