Delta Seeks to End Pilots’ Plan

Delta Air Lines Inc. said Friday that it asked the U.S. Bankruptcy Court to allow it to terminate the Delta Pilots Retirement Plan to help it emerge from Chapter 11 protection.

The Air Line Pilots Assn., the union representing more than 6,800 Delta pilots, does not oppose the termination of the plan, the company said.

Such a termination would not affect Delta’s other defined-benefit pension plan, covering about 91,000 active and retired flight attendants and ground employees.

The move was expected as the airline earlier said it would seek to end the pilot plan. At the time, Delta said it could not recover from its financial and operational crisis if the plan remained in effect. The company said the pilot plan’s costs were expected to exceed $1 billion in the near term.

On June 19 Delta provided its active and retired pilots with a notice of intent to terminate the retirement plan. It also served notice then to the Pension Benefit Guaranty Corp., the federal agency that insures defined-benefit pension plans.

The plan covers more than 13,000 active and retired Delta pilots and their beneficiaries. The proposed effective date of termination of the plan is Sept. 2.

Pension fund solvency has become a major issue in the U.S. economy and politics. This week, the Senate approved legislation to overhaul pension funding rules and close loopholes that allowed companies to claim their pensions were financially sound even though some plans carried staggering liabilities.

The bill would require companies managing single-employer traditional pensions -- so-called defined-benefit plans that offer a fixed and secure benefit at retirement -- seven years to fully fund them beginning in 2008.

Nationwide, promised benefits in corporate defined-benefit pension programs covering nearly 35 million workers and retirees outpace assets in those plans by $450 billion, government figures show.

The legislation also gives airlines substantially more time to meet their obligations, a provision sought by carriers Delta and Northwest Airlines Corp.

UAL Corp.’s United Airlines, the nation’s No. 2 carrier, terminated its pilots’ pension when it was in bankruptcy protection.