A group representing retired Delta Air Lines Inc. pilots and their families said a new federal law may allow the airline to keep its pension plan and asked a U.S. judge to delay a hearing to consider terminating it.
DP3, a non-profit corporation representing 2,850 retired pilots and family members, said the Pension Protection Act of 2006, signed into law Thursday, appears to relieve Delta of the requirement to make lump sum payments to retirees. Without having to make such payments, Delta may be able to save its plan, DP3 said in papers filed with the U.S. Bankruptcy Court in New York.
"The termination of the retirement plan is relief of the last resort and will result in immediate and irreparable harm to the retired pilots," Shelley Rucker, the group's lawyer, said in court papers. "Every means of avoiding it should be explored."
Delta on Aug. 4 said it will not be able to exit bankruptcy unless the plan is terminated. The airline said the plan doesn't have enough money to satisfy the lump sum payment provision, which allows retired pilots to receive half their benefits in an up-front payment. Delta is the largest U.S. carrier in bankruptcy.
U.S. Bankruptcy Judge Adlai Hardin is scheduled to consider termination of the plan at a hearing on Sept. 1. DP3, which had originally said it would not oppose Delta's request to terminate the plan, said it needs more time to analyze the new law.
About 1,946 pilots will be eligible to retire Oct. 1. Of those, 857 would have the choice of receiving $500,000 up front unless the plan is terminated. Having to make such payments would trigger a default on $2 billion in bankruptcy loans, Delta said.