Under the settlement agreement, according to the announcement, the PBGC will make a final decision whether to accept the PBGC staff’s recommendation that the Pilot Plan meets the statutory criteria for distress termination. If accepted, the PBGC will become the plan’s trustee and the plan will be terminated as of September 2, 2006.
In settlement of its claims against Delta and its affiliates, the PBGC will be allowed a pre-petition unsecured claim against Delta of $2.2 billion, and the debtors’ proposed plan of reorganization will provide for the distribution to the PBGC of $225 million in senior unsecured notes, the announcement said.
A bankruptcy court approved termination of the Pilot Plan pending approval by the PBGC in September (See Delta Gets Court OK to Terminate Pilot Plan). It was previously announced that retired Delta pilots will receive in excess of $800 million in allowed claims with respect to their lost non-qualified pension benefits and Delta’s active pilots are now covered by a defined contribution pension plan previously negotiated with the Air Line Pilots Association (See Delta Adds $719M in Claims for Retired Pilots).
Delta reconfirmed in the settlement agreement with the PBGC that it will preserve the Delta Retirement Plan, which covers ground employees and flight attendants. Preservation of the plan was made possible by airline relief provisions of the Pension Protection Act of 2006, the announcement said.