According to the announcement, the airline must now get approval from the Pension Benefit Guaranty Corporation (PBGC) to terminate the plan. The company is requesting the plan be terminated as of September 2, 2006.
Delta told the bankruptcy court last week that keeping the plan in place would mean a “crippling” operational and financial crisis that would botch its efforts to emerge from Chapter 11 protection by mid-2007 (See Delta Pushes for Pension Termination ).
Over the weekend, a group of around 100 retired Delta pilots, known as DP2, withdrew their objection to the termination, according to the announcement. In return Delta will pay approximately $500,000 toward DP2’s legal fees and other expenses. The PBGC, Delta’s Unsecured Creditor’s Committee, the Air Line Pilots Association (ALPA), and another group of approximately 2,850 retired Delta pilots known as DP3, Inc. had all previously agreed not to oppose the plan’s termination.
Delta said the airline provisions of the Pension Protection Act, signed into law August 17, 2006, (See What’s Inside the Pension Protection Act ) does not provide the opportunity to preserve its pilot plan because of the plan’s lump sum feature. The terms of the plan allow pilots to retire at age 50 and take out half of their benefit in a lump sum payment and receive the rest as an annuity.
Delta said it is on track to realize more than two-thirds of the approximately $3 billion in annual financial improvements of its business plan by the end of this year.