Delta dipping into disability and survivors trust fund to pay bills

[FWAAA]

This isn't the kind of news you'd expect to hear from a company with plenty of DIP financing:

Delta Allowed to Dip Into Disability Fund

Monday February 6, 12:22 pm ET
By Michael J. Martinez, AP Business Writer

Delta Allowed to Dip Into Disability Fund As Long As Payments Are Made

NEW YORK (AP) -- Delta Air Lines Inc. can continue using funds earmarked for a disability and survivors trust to meet other financial obligations as it reorganizes under Chapter 11, a U.S. bankruptcy judge ruled Monday, but only so long as it continues to make payments to retirees and other beneficiaries.

The court-appointed committee representing retiree interests had sought to force Delta to seek the retirees' approval before using funds from the disability and survivors trust, stating that removing the funds, which Delta seeks to continue doing, posed an inherent risk to retirees' benefits.

Dean Gloster, an attorney for committee, said Delta had already used $83 million of the trust's money for severance and sick leave payments prior to filing for bankruptcy last fall, and said the embattled airline wanted to use more of the trust's money to meet its obligations going forward.

http://biz.yahoo.com/ap/060206/delta_bankruptcy.html?.v=2

 

[magsau]

World will be here to tell us how this is SOP and not to worry, DL is doing just fine.

 

[FWAAA]

Here's another news story with more detail:

http://biz.yahoo.com/ap/060206/delta_bankruptcy.html?.v=4

 

[WorldTraveler]

I have previously posted that I do not think this is something that I would do if I ran the zoo...but I don't. Note that the judge said that his approval for DL to tap the funds means that they have to continue to provide the benefits promised under the fund. At the least, DL is either tapping a fund for a benefit they continue to offer in the future, meaning it is overfunded or the company wants to use the money now and pay in cash for expenditures later (not entirely unreasonable). At the worst, the company does not intend to offer the benefits under the plan and figures they might as well use the cash. Since UA and US succeeded at terminating their defined benefit pension plans, DL certainly reserves the right to amend the benefits covered by this fund. While those beneficiaries should be concerned, the reality is that no fringe benefit at any US company is guaranteed and DL reserves the right to change its compensation and benefit policies. May sound cold but that is the reality of the world we live in.

 

[oldiebutgoody]

Is that a kool aid stain?