Bail Out, Part Two

Delta does the dancing and we get to pay the band. Bloomberg (06.16.06):

“Delta Air Lines Inc., the largest U.S. carrier operating in bankruptcy, will seek to terminate its pilots’ pension plan beginning June 19.”

Delta Air Lines to Seek to End Pilots’ Pension Plan

“If the court approves Delta’s request, the carrier would join UAL Corp.’s United Airlines and US Airways Group Inc. in terminating pension plans while in Chapter 11.” The Pension Benefit Guaranty Corporation, on behalf of you, the taxpayer, “has already assumed $6.6 billion in pension liabilities owed by United, and $3 billion for US Airways.”

Note that Delta has two pension plans, one for the pilots and another for flight attendants and ground workers. How underfunded are Delta’s plans? Ha! What a joke. NYTimes (06.17.06):

“The Pension Benefit Guaranty Corporation, the federal agency that backstops private pensions, estimated the day after Delta’s bankruptcy filing that its entire pension obligations were underfunded by $10.6 billion.”

Delta Takes Steps to Avert Mass Retirement of Pilots

Delta used a different calculator and came up with a shortage of only $6.37 billion.

It’s the pilots’ plan Delta wants to terminate. The big reason is that owing to “an unusual set of circumstances” as many as 1,000 pilots would have been eligible for retirement “as early as July 1.” The terms and conditions of the plan would have required Delta to fork over “hundreds of millions of dollars” in lump-sum retirement payments.

That happened to ’em last year, “when more than 1,100 pilots took early retirement in just a few months. They stripped $873 million out of the plan.”

If that were to happen again this year, the exodus of pilots theoretically would have resulted in “46 of Delta’s 51 biggest aircraft [being] grounded and up to 60 percent of its international operations would have to shut down.”

That’s some shrewd and far-sighted retirement package Delta negotiated with the pilots, huh.

Finally, our hats are off to United CEO Glenn Tilton. Santa Maria Times (05.17.05):

While United’s rank-and-file try to figure out how to survive on reduced benefits, Tilton will be taking to the bank $4.5 million United put in trust for him.

Just three months after taking over at United, Tilton guided the airline into bankruptcy and engineered the forfeiture of United’s pension responsibilities.”

Santa Maria Times

At the time United filed, our buddy Glenn “had already cashed in on $3 million from those guaranteed retirement trusts.”

Nice work, eh?


One Response to “Bail Out, Part Two”

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