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Delta pilots’ $11b pension plan likely to be terminated
Officials at bankrupt Delta Air Lines and its pilot union, who don’t agree on much, agree on one thing – the pension plan covering thousands of Delta Air Lines pilots, underfunded by $11 billion, will most likely go into default and terminated, just like pensions at both US Airways and United Airlines during their recent bankruptcy reorganizations.
If terminated it would represent the largest corporate pension plan default in U.S. history.
There are 1,700 Delta pilots who are eligible to retire right now, with 800 eligible for lump-sum payments of at least $500,000 each, representing half their total pension, at retirement.
Delta had stopped making contributions to its pension plan when it went under bankruptcy. Additionally, it received temporary approval not to pay the lump-sum payments from the federal agency that insures private pension plans through October. If and when the lump-sum payments were to resume, Delta would not be able to come up with its $1 billion pension plan cash.
Due to failed negotiations for contract concessions with the pilots, a three-man panel of arbitrators is currently deciding whether Delta can terminate its contract with their 6,000 pilots and force cheaper terms on them. Delta pilots did not feel like extending further concessions after having agreed to $1 billion per year in contract concessions in 2004.
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