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U.S. moves to block Delta pilot deal
Agency files suit, calls plan to possibly saddle the government with billions in pensions an 'abuse of the program.'
May 26, 2006: 9:50 AM EDT
NEW YORK (Reuters) - A U.S. federal pensions insurer has filed a court objection to a Delta Air Lines pensions deal with its pilots union, calling it an abuse that could cost the government billions of dollars.
The government's Pension Benefit Guaranty Corp. (PBGC) criticized bankrupt Delta Air Lines Inc.'s plan to compensate pilots for unfunded benefits by giving them $650 million in notes should their retirement plan be terminated.
It said the agreement with the Air Line Pilots Association "appears to pose a substantial abuse of the federal pension plan termination insurance program."
If the retirement plan terminates, "the federal pension insurance program will sustain a multi-billion dollar loss as a consequence," the PBGC said.
The pension insurer made its filing Wednesday in U.S. Bankruptcy Court in the Southern District of New York, which is overseeing Delta's bankruptcy reorganization.
Delta pilots criticized the agency for the filling.
"A government organization established to protect workers should now be supporting, rather than actively opposing, a fairly negotiated consensual agreement that helps ensure a future for Delta and jobs for 50,000 Delta employees," the pilot's union said in a statement. "It is in everybody's best interest - the airlines, our employees, the traveling public and ultimately the taxpayer that this deal be approved to allow Delta to successfully reorganize and exit bankruptcy."
Atlanta-based Delta (Research), which filed for bankruptcy protection from creditors in September, reached an agreement last month with its pilots union for concessions worth $280 million, as part of its plan to raise $3 billion in annual cost savings and revenue increases.
PBGC's objection to Delta's deal with the union comes after retired pilots at the airline also opposed the agreement.
The agreement "sets the stage for drastically reducing certain vested pension benefits of approximately 5,800 retired pilots," Delta's retired pilots said in a separate filing Tuesday.
But Delta's pilots again stood by the deal, calling it "vital to the successful restructuring of Delta and the long-term health of the airline" in a statement.
Delta is seeking the court's approval for its deal with the pilots, which was reached after months of negotiations, and is yet to be ratified by union members.
U.S. moves to block Delta pilot deal
Agency files suit, calls plan to possibly saddle the government with billions in pensions an 'abuse of the program.'
May 26, 2006: 9:50 AM EDT
NEW YORK (Reuters) - A U.S. federal pensions insurer has filed a court objection to a Delta Air Lines pensions deal with its pilots union, calling it an abuse that could cost the government billions of dollars.
The government's Pension Benefit Guaranty Corp. (PBGC) criticized bankrupt Delta Air Lines Inc.'s plan to compensate pilots for unfunded benefits by giving them $650 million in notes should their retirement plan be terminated.
It said the agreement with the Air Line Pilots Association "appears to pose a substantial abuse of the federal pension plan termination insurance program."
If the retirement plan terminates, "the federal pension insurance program will sustain a multi-billion dollar loss as a consequence," the PBGC said.
The pension insurer made its filing Wednesday in U.S. Bankruptcy Court in the Southern District of New York, which is overseeing Delta's bankruptcy reorganization.
Delta pilots criticized the agency for the filling.
"A government organization established to protect workers should now be supporting, rather than actively opposing, a fairly negotiated consensual agreement that helps ensure a future for Delta and jobs for 50,000 Delta employees," the pilot's union said in a statement. "It is in everybody's best interest - the airlines, our employees, the traveling public and ultimately the taxpayer that this deal be approved to allow Delta to successfully reorganize and exit bankruptcy."
Atlanta-based Delta (Research), which filed for bankruptcy protection from creditors in September, reached an agreement last month with its pilots union for concessions worth $280 million, as part of its plan to raise $3 billion in annual cost savings and revenue increases.
PBGC's objection to Delta's deal with the union comes after retired pilots at the airline also opposed the agreement.
The agreement "sets the stage for drastically reducing certain vested pension benefits of approximately 5,800 retired pilots," Delta's retired pilots said in a separate filing Tuesday.
But Delta's pilots again stood by the deal, calling it "vital to the successful restructuring of Delta and the long-term health of the airline" in a statement.
Delta is seeking the court's approval for its deal with the pilots, which was reached after months of negotiations, and is yet to be ratified by union members.
