Court Upholds Delta Pilot Pension Plan Termination

December 12, 2006 ( - The US District Court for the Southern District of New York has upheld a bankruptcy court ruling approving the termination of Delta Air Lines pilots' pension plan.

Delta received bankruptcy court approval September 5 to terminate the plan (See Delta Gets Court OK to Terminate Pilot Plan ), but that ruling was appealed by more than 200 retired Delta pilots, Bloomberg News reports. The retirees claimed the court and Delta had failed to adequately notify retired pilots about the airline’s request to end the plan and had not considered alternatives.

However, US District Judge Denise Cote rejected that argument and said sufficient evidence was presented during the bankruptcy court hearing to support the court’s ruling. Cote said more than 800 pilots would be likely to retire early if a provision of the plan that allows retired pilots to receive half of their benefits in a lump-sum payment were to stay in place. “This would result in a reduction of approximately one-third of Delta capacity and lost operating cash flows of between $1.3 and $2.1 billion,” Cote said in the opinion, according to Bloomberg, which might put the company “at risk of liquidation.”

Earlier this month, Delta announced it had reached an agreement with the Pension Benefit Guaranty Corporation (PBGC) resolving all issues regarding the plan’s termination (See PBGC Reaches Agreement with Delta on Pilots Plan ). Delta attorney Marshall Huebner said in a statement retired pilots will be able to collect “significant recoveries” from the PBGC and other entities, Bloomberg reported.