Agency Opposes Delta Accord

The U.S. agency that insures pensions objected to a proposed agreement between Delta Air Lines Inc. and its pilots union under which the airline would pay pilots $650 million if it terminated their pension benefits.

The Pension Benefit Guaranty Corp., which insures defined-benefit plans when employers can’t meet their obligations, accused Delta of trying to make an “end run” around provisions of the bankruptcy law that afford creditors, including the agency, meaningful review of agreements to pay third parties.

“The agreement ... appears to pose a substantial abuse of the federal pension plan termination insurance program,” the agency said in a filing Wednesday.

“It dictates the terms of a plan of reorganization, without the protections afforded to creditors in the confirmation process.”

Delta filed for bankruptcy protection in New York last year, seeking pay and benefit concessions from its unions.

As part of an agreement reached between the Air Line Pilots Assn. and Delta in April, the pilots would receive $650 million in notes or cash in exchange for not opposing the termination of their defined-benefit pension plans.

Delta’s 6,000 pilots are voting on the tentative 3 1/2 -year agreement that would cut pay and benefits by about $280 million a year and provide pilots with a $2.1-billion bankruptcy claim. Voting is scheduled to end Wednesday on the agreement, which also must be approved by the Bankruptcy Court.