Delta to end pilot pension plan

The bankrupt airline says it received court approval to end its pilot pension plan.
NEW YORK -- A U.S. bankruptcy court Tuesday allowed Delta Air Lines Inc. to terminate its pilot defined benefit pension plan, clearing a major hurdle in its restructuring plans.
The plan covers more than 13,000 active and retired Delta pilots and their beneficiaries. Delta (Charts) must now also seek the approval of the Pension Benefit Guaranty Corp., the federal pension insurer.
The airline said it wants to terminate the plan effective Sept. 2.
Judge Adlai Hardin issued his ruling allowing Delta to end the plan after DP2, a group of about 100 retired pilots, withdrew its objection to the termination, Delta said. The airline will pay DP2 about $500,000 in legal fees and other expenses.
The airline's pilots' union, representing more than 6,800 current pilots, had already agreed to the move.
Atlanta-based Delta, which has been operating under bankruptcy protection since September of last year, had argued that continuing the plan would jeopardize its ability to emerge from Chapter 11.
The company said that the plan's costs are expected to exceed $1 billion in the near term and argued that not terminating the plan would make finding lenders for exit financing difficult.
Delta said it estimated that after the termination of the plan, each pilot retiree will receive, on average, about $75,200 in annualized pension benefits.
Delta also said it was on track to realize more than two-thirds of its business plan's $3 billion in annual financial improvements by the end of this year, and planned to emerge from bankruptcy by mid-2007.