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Delta Seeks To End Pilots Pension Plan  
User currently offlineNWDC10 From , joined Dec 1969, posts, RR:
Posted (7 years 11 months 4 weeks 16 hours ago) and read 2485 times:

ATLANTA - Delta Air Lines Inc. filed a formal request with bankruptcy court late Friday to terminate its pilots' pension plan, as
President Bush prepared to sign a bill aimed in part at helping the struggling carrier save its other employees' pensions.
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If the court in New York approves Delta's request to cancel its pilots' pensions effective Sept. 2, the government's pension insurer would take over the plan and pay pilots a reduced benefit based on when they retire and other factors. A hearing on the request is set for Sept. 1.

The 6,000 pilots, as part of a $280 million concessions agreement with the company first reached in April, have agreed not to oppose the pension termination request, though other groups may oppose it. Atlanta-based Delta notified the Pension Benefit Guaranty Corp. in June of its intent to seek termination of the plan.

"Unless the pilot plan is terminated, Delta will very soon face an operational and financial crisis that will prevent it from emerging from Chapter 11," the airline said in its filing.

The bankruptcy court request comes just a day after the Senate approved a pension bill that provides special relief for Delta and Eagan, Minn.-based Northwest Airlines Corp., allowing them to have 17 years to fully fund their pension plans.

Delta, the nation's third-largest carrier, had lobbied hard for the bill, arguing it was essential to help them avoid terminating the pension covering its ground workers and flight attendants. Bush said Friday he planned to sign the bill into law soon.

Delta's effort to terminate its pilots pension plan, which is significantly underfunded, had been expected, as the company seeks to emerge from Chapter 11 by the middle of 2007 a leaner airline. UAL Corp.'s United Airlines, the nation's No. 2 carrier, terminated its pilots' pension when it was in bankruptcy protection.

Delta has promised its pilots a $650 million note in the event the pension is terminated. Delta also has promised the pilots a $2.1 billion unsecured claim. The PBGC has argued that money belongs to the agency, a claim the company has rejected.

Once the plan is terminated, the company's pilots won't be entitled to the hefty lump sum payments under the existing pension plan, which allows pilots to retire at 50 and receive half their benefits in a one-time payout and the rest in an annuity later.

The lure of that lump sum prompted many pilots to put in for retirement before Delta filed for bankruptcy protection last September. But a shortfall in the pension fund has prevented pilots from cashing in their lump sums since Oct. 1.

"If the pilot plan is not terminated and the lump sum door reopens, Delta will immediately face a huge wave of pilot early retirements by its most senior pilots," Delta said in its filing Friday.

Delta said it would have to cancel thousands of flights if that happened.

"Delta likely could not survive an operational disruption of this magnitude," the airline said.

Delta said that if Bush signs the relief legislation it believes it can emerge from Chapter 11 without terminating its non-pilot pension plan, because that plan does not have a lump sum feature.

http://news.yahoo.com/s/ap/20060805/...;_ylu=X3oDMTA3OTB1amhuBHNlYwNtdHM-

Will there be a strike?

Robert NWDC10

5 replies: All unread, jump to last
 
User currently offlineTinPusher007 From United States of America, joined Feb 2005, 971 posts, RR: 1
Reply 1, posted (7 years 11 months 4 weeks 7 hours ago) and read 2430 times:

Quoting NWDC10 (Thread starter):
Will there be a strike?

No, pilots are legally allowed to strike without having a contract and then only after an impasse AND a 30 day cooling off period, if Im not mistaken. Besides if you read the the article, it states that the pilots will not oppose the termination of their plan...

Quoting NWDC10 (Thread starter):
The 6,000 pilots, as part of a $280 million concessions agreement with the company first reached in April, have agreed not to oppose the pension termination request, though other groups may oppose it.

I wonder what "other groups" they are speaking of.



"Flying isn't inherently dangerous...but very unforgiving of carelessness, incapacity or neglect."
User currently offlineBobnwa From United States of America, joined Dec 2000, 6446 posts, RR: 9
Reply 2, posted (7 years 11 months 4 weeks 6 hours ago) and read 2416 times:

Quoting NWDC10 (Thread starter):
Will there be a strike?

This is old news. The DL pilots agreed to this a long time ago. The $650 million note was part of the negotiations appoved by DL ALPA.


User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 3, posted (7 years 11 months 4 weeks 6 hours ago) and read 2392 times:

Quoting NWDC10 (Thread starter):
Once the plan is terminated, the company's pilots won't be entitled to the hefty lump sum payments under the existing pension plan, which allows pilots to retire at 50 and receive half their benefits in a one-time payout and the rest in an annuity later.

How did the beancounters ever let the company come to such a horrid financial state in the first place? Enron and Ken Lay are raked throughh the coals but these poorly managed companies get off with a clean slate and a slap on the wrists?

Quoting NWDC10 (Thread starter):
Delta said that if Bush signs the relief legislation it believes it can emerge from Chapter 11 without terminating its non-pilot pension plan, because that plan does not have a lump sum feature.

Okay, so now I'm a little confused here - the pilots are the only ones who will be losing their pension plans? If I'm a DL pilot and the mangament got to keep their pension plan but mine was to be dumped onto the PBGC I'd rather have voted to strike (and find a new job.)

Quoting NWDC10 (Thread starter):
Delta has promised its pilots a $650 million note in the event the pension is terminated. Delta also has promised the pilots a $2.1 billion unsecured claim. The PBGC has argued that money belongs to the agency, a claim the company has rejected.

I have to admit that I tend to side with the PBGC on this one - sounds like DL want's their cake and to eat it tool; you can't get the best of both worlds here. If you want to dump your pension onto the PBGC than you should have to play by their rules and not just pick and choose which ones fit your situation the best.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 4, posted (7 years 11 months 3 weeks 6 days 23 hours ago) and read 2323 times:

DL told the pilots a year ago that their pension plan could not be saved because of the lump sum provision in their plan, which does not exist in the non-pilot plan. You'll recall that DL had nearly 1500 pilots retire in order to get their $1-2M lump sum distributions. In order to erase the deficit, DL would have to contribute over a billion dollars a year. But the irony is that as soon as they erased the deficit, the pilots would be free to start retiring en masse again.

DL told the pilots the plan could not be saved. They also told the PBGC and they testified to that fact to Congress as they were asking for pension relief for the larger non-pilot plan.

As part of the contract that was ratified in June, DL agreed to offer the pilots a $650 million note to make up for most of the benefits they would lose by turning the plan over to the PBGC. DL also agreed to give the pilots a bankruptcy claim which will probably be converted into equity in the reorganized company.

Bottom line is that the pilots, the PBGC, and Congress were all told months ago that DL intended to terminate the pilot pension plan regardless of whether pension relief was passed. Congress obviously considered that it was worth saving the non-pilot plan at DL as well as all plans at NW in addition to the relief the bill provides AA and CO.

Even with the pension termination, DL pilots are still the highest paid of any airline that has filed bankruptcy in this decade. Because CO has frozen its pilot pension plan and will take advantage of pension relief legislation, only AA's pilots remain with a defined benefit pension plan. AA's pilots should be grateful for what they have because it is clear that the rich pension benefits pilots once enjoyed can no longer be sustained.


User currently offlineScarletHarlot From Canada, joined Jul 2003, 4673 posts, RR: 56
Reply 5, posted (7 years 11 months 3 weeks 6 days 16 hours ago) and read 2262 times:

Quoting AirRyan (Reply 3):
the pilots are the only ones who will be losing their pension plans?

The pilots have had an increase in the richness of their defined contribution plan to make up for the lack of the pension plan.

The non-pilots pension plan ("Family Care plan") applies to everybody other than the pilots and it still exists, although it has been frozen.

Quoting WorldTraveler (Reply 4):
DL told the pilots a year ago that their pension plan could not be saved because of the lump sum provision in their plan, which does not exist in the non-pilot plan. You'll recall that DL had nearly 1500 pilots retire in order to get their $1-2M lump sum distributions. In order to erase the deficit, DL would have to contribute over a billion dollars a year. But the irony is that as soon as they erased the deficit, the pilots would be free to start retiring en masse again.

This is not quite true. The lump sums that the pilots can take are (for the most part) non-qualified. This means that these are not paid from the pension trust but instead are paid out of general revenues. They are not funded (money set aside in advance to cover the liabilities) so there is no deficit due to the lump sums. The lump sums were causing a lot of difficulty because the pilots did not have to give any advance warning of their retirement and could request a lump sum. Delta then had to come up with the money. The lump sums were hundreds of thousands of dollars and some were over a million. I never saw one over about $1.2 million.

Delta is, however, deeply underfunded on the qualified side of the plan and really it is not salvageable. I hate to see this happen.



But that was when I ruled the world
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