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Delta Pilots Pension Plan in Danger of Being Nixed

Posted on: Friday, 30 December 2005, 18:00 CST

By HARRY R. WEBER

Delta pilots pension plan in danger of being nixed

ATLANTA The deep pay cuts pilots at bankrupt Delta Air Lines have accepted may be the least of their worries: their retirement benefits are in jeopardy as well.

Union leaders say that in the lead-up to approving another round of salary cuts on Wednesday Deltas 6,000 pilots expressed serious concerns that the nations third-largest carrier would next seek to terminate their pension plan.

The Air Line Pilots Association says the latest pay cut agreement, while painful, will at least buy its leaders some time to negotiate conditions that would be implemented if the pension plan is nixed.

The union wants Delta to credit the amount the airline has not paid to the pilots pension plan since the bankruptcy filing toward a comprehensive concessions package.

Pilots also are hoping to share in Deltas future profits and new equity that will be issued when it emerges from bankruptcy.

They were trying to pocket the money they werent contributing to the defined benefit pension plan, and we called their bluff on it, union spokesman John Culp said. I believe this (agreement) has forced their hand and theyre going to have to address it with us.

Culp said Delta missed $145 million in qualified pension contributions on Oct. 15 and has been refusing to pay roughly $7 million a month in nonqualified pension contributions. Delta filed for bankruptcy on Sept. 14.

If theyre going to stop supporting the plan, then contractually they have to deal with us, Culp said.

Delta spokeswoman Chris Kelly said the airline is unsure what will happen to the pension plan.

Well continue to work together with ALPA and Delta active and retired employees to try to save Deltas pension plan, Kelly said.

There are simply too many factors, some of which are beyond the companys control, to be able to make guarantees at this time.

Asked about the unions contention it should be given credit for the money the airline has saved thus far in missed pension contributions, Kelly declined to comment.

Congress is still debating pension reform legislation that could help Delta spread out the payments of future obligations to its pension plan. But even if that reform comes it may not be enough.

The 14-percent cut in wages and other cuts equal to an additional 1 percent wage reduction that pilots agreed to Wednesday are on top of a 32.5 percent pay cut the pilots agreed to last year as part of a $1 billion annual concessions package.

Delta had been seeking to void the pilot contract so it could impose $325 million in new concessions on its pilots, but agreed to an interim deal worth less than half that. The two sides will now try to work out a comprehensive deal by March. If they cant, a three- person arbitration panel will decide the fate of the pilot contract.

The pilot unions threat of a strike is on the back burner for now. But if the contract is ultimately thrown out by the arbitration panel, the threat could resurface.

That point was reinforced in a letter the chairman of the unions executive committee, Lee Moak, sent to pilots after Wednesdays vote.

While I am hopeful that an agreement can be obtained, a decision by the neutral panel on the question of contract rejection is still a real possibility, Moak wrote.

Source: Advocate; Baton Rouge, La.

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