Administration August 22, 2007

Delta Pilots to See Boost in PBGC Pension Benefits

August 22, 2007 (PLANSPONSOR.com) - About 3,300 current and former Delta Air Lines pilots will see a boost in their pension checks in November from the Pension Benefit Guaranty Corporation (PBGC) because of an unexpected swell in assets linked to the airline's bankruptcy reorganization, the Cox News Service reported.

Reported by

Adrien Martin

The exact amount of the increases has not yet been decided, but agency officials are meeting with the current and former pilots to determine the benefits.

The private pension insurer took over the Delta plan in January (See PBGC Takes Over Delta Pilots Plan ) after a bankruptcy judge finally approved the termination (See Court Upholds Delta Pilot Pension Plan Termination ). The judge previously ruled that Delta could not emerge from Chapter 11 unless the pilot plan was terminated.

The PBGC had received a $225 million IOU and a $2.2 billion unsecured claim as part of a settlement last year for taking over Delta’s pension plan. Those claims were converted into Delta stock when the airline emerged from bankruptcy in April, according to the news report.

This means that the pension insurer has about 50 million Delta shares worth about $800 million and expects to receive more as remaining disputes in the bankruptcy case are settled, according to the news report.

In a separate case, a group of approximately 1,000 retired Delta pilots asked a New York bankruptcy court at the beginning of this month to cover pilots who retired from the airline between 2000 and 2005 and were participants in Delta’s defined benefit plan (See Delta Pilots Group Demands $100M in Pension Benefits ). They claim that the airline misinterpreted a federal tax code, collectively cutting short their benefits by $100 million.