Delta Air Lines expects the federal pension agency on Tuesday to receive official notice that the airline wants to shed its pilots pension plan, a cash-saving move Delta says is necessary for survival.
"It is being sent by overnight mail," Delta spokeswoman Gina Laughlin said on Monday.
The filing with the quasi-government Pension Benefit Guaranty Corp., which guarantees pension benefits up to certain limits, is the first step in Delta's widely anticipated move to terminate its traditional pension plan for pilots by Sept. 2.
The pilots' pension trust, which was underfunded by $1.8 billion as of a year ago, covers about 13,000 current or retired pilots or dependents.
Delta's bankruptcy judge would have to approve the idea, and the pension agency or other parties could object in court.
Scuttling the plan enables Delta to avoid large cash payouts to fully fund the plan. The PBGC would assume responsibility for payout of accrued benefits, up to certain limits.
Delta's pilot union agreed in a recently ratified contract not to oppose pension plan termination. The airline agreed to pay the union a $650 million note that it could use to partly offset the reduction of benefits that will result from plan termination.
Delta has already switched to a cheaper 401k style plan for pilots going forward.
The airline has a larger pension plan covering about 91,000 ground workers, flight attendants and dependents, and it is also badly underfunded. It has not moved to terminate that plan, and executives say they hope to retain it if Congress passes reform legislation giving airlines up to 20 years to fully fund pension plans.
But Delta said certain features of the pilot plan made it impossible to save even if Congress passes the measure.
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