Delta, Pilots to Spar in Court Over Pensions

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. The Atlanta-based company vows it won’t do either unless a judge forces its hand.

Lawyers for both sides will argue the issue at a Bankruptcy Court hearing today in New York in a dispute that comes as 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, a lawyer for the pilots.

The pilots argue that 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, 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. Company spokeswoman Chris Kelly declined to comment on Delta’s long-term intention for the pilot pension plan, but she said the airline believed that 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,” Kelly said.