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Judge: Delta Pilots Must File Suit on Pensions

Posted on: Wednesday, 19 October 2005, 06:00 CDT

By Aleksandrs Rozens

NEW YORK -- A bankruptcy judge ruled Monday that, if Delta Air Lines Inc. pilots want to challenge the company's decision not to make certain pension payments, they need to file a lawsuit.

Judge Prudence Carter Beatty did not rule on the merits of a motion the pilots filed seeking reinstatement of the payments. Instead, the judge indicated they need to follow procedure and she recommended that Delta meet with its pilots to try to come to a resolution outside the court. She also recommended that Delta meet with its pilots to try to come to a resolution outside the court.

"I think the next step is we talk to the company and find some middle ground which is something she (the judge) encouraged," said Dean Booth, a lawyer for the pilots. "She suggested that we call the debtor (Delta), and we intend to do that."

The pilots want the nation's third-largest carrier, which filed for bankruptcy protection Sept. 14, to continue making minimum contributions to their pension plan and certain payments to higher- paid retirees. The Atlanta-based company vows it won't do either unless a judge forces its hand.

Lawyers for both sides argued the issue in court Monday. The dispute comes as many observers wonder whether Delta will terminate its pension plan altogether if it doesn't get relief from Congress.

Beatty repeatedly expressed concern that, if the airline tries to pay retiring pilots a lump sum payment, that would hurt the airline's ability to emerge from bankruptcy. "Delta does not have the money to pay off all of these pilots," she said.

The pilots argue their contract with Delta requires the airline to continue making the pension payments in question until it applies for and gets 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 that Delta therefore does not have to make the payments a priority during its reorganization.

Attorneys representing the retired pilots could appeal the judge's order Monday or they can comply and file a lawsuit in the bankruptcy court within a week.

Also Monday, the bankruptcy judge ruled that Delta can surrender aircraft it has been leasing.

The airline does not have to transport the aircraft to their original locations -- where the lessors are based -- nor does it have to repair the aircraft, the judge ruled. The bankruptcy judge did not rule out that Delta may have to pay the expense of getting planes back to their owners.

Source: Cincinnati Post

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