Delta Pilots Group Demands $100M in Pension Benefits

August 10, 2007 (PLANSPONSOR.COM) - Charging that Delta Air Lines is misreading federal tax law, a group of retired pilots has asked a federal bankruptcy judge to force the carrier to pay them $100 million in pension benefits the pilots say they are still owed.

A news report in the Fulton County Daily Report said the approximately 1,000 retired pilots made the request to the New York bankruptcy court to cover pilots who retired from Delta between 2000 and 2005 and were participants in Delta’s defined-benefit pension plan.

The pilots “are not being allowed a claim for their full retirement benefits … because a portion of those benefits are being disregarded by Delta through Delta’s inconsistent application of the compensation and benefit limitations specified under Internal Revenue Code §401(a)(17) (the “Compensation Cap”) and §415(b) (the “Benefit Cap”),” according to the filing, the news report said.

The retired pilots are asking U.S. Bankruptcy Judge Adlai S. Hardin Jr. to order Delta to have the payments made from a reserve fund the airline established to pay its creditors.

How much money each pilot is owed varies, but the amount hovers around $30,000, according to plaintiffs’ attorneys.

When Delta emerged from bankruptcy protection in April, terms of its bankruptcy deal called for the airline to pay retired pilots an estimated 65 cents for every dollar owed by their supplemental retirement plan and an estimated 85 cents for a qualified plan, the plaintiffs’ lawyers said.

The case is In re: Delta Air Lines, No. 1-05-bk-17923 (U.S. Bankruptcy Court for the Southern District of New York, filed Sept. 14, 2005).