May 25, 2006
Delta Pilots Oppose Rejection Effort by PBGC
ATLANTA, Ga. -- The Delta pilots, represented by the Air Line Pilots Association, Int’l (ALPA), announced today they would vigorously oppose an effort by the Pension Benefit Guaranty Corporation (PBGC) to reject the Bankruptcy Restructuring Agreement, LOA 51, upon which tentative agreement was reached by Delta and ALPA negotiators last month. The ALPA leadership has unequivocally recommended the pilots ratify the agreement. Ratification voting began May 17 and will close May 31. A hearing for the Court’s approval of the agreement, and any objections, is scheduled in the Bankruptcy Court the same day.
The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 (ERISA). Late yesterday, PBGC representatives filed their objection with the bankruptcy court seeking to reject the letter of agreement, LOA 51. They assert that the unsecured pilot notes and bankruptcy claim ALPA negotiated with Delta are compensation for the termination of the pilots’ DB Plan, and that they may also be considered as replacements for a terminated pension plan, and they argue that such provisions would violate ERISA. On a more technical level, the PBGC argues that LOA 51 was not proposed in good faith, does not represent a “sound business judgment” by Delta and, if accepted by the court, would negate any opportunity for Delta’s other creditors to object to it during future consideration of Delta’s plan of reorganization. ALPA strongly disagrees with this position.
Delta MEC Chairman, Captain Lee Moak stated, “Just as we have before, we will continue the fight to protect our contract. It is unfortunate that this threat to our careers and our airline now comes from a government corporation created solely to protect the hard-earned benefits of American workers. The Delta pilots have made unprecedented concessionary sacrifices on the order of billions of dollars to save our company. It is in everybody’s best interest - the airlines, our employees, the traveling public and ultimately the taxpayer that this deal be approved to allow Delta to successfully reorganize and exit bankruptcy. A government organization established to protect workers should now be supporting, rather than actively opposing, a fairly negotiated consensual agreement that helps ensure a future for Delta and jobs for 50,000 Delta employees.”
Captain Moak also noted that, unlike the PBGC, the unsecured creditors committee, representing Delta’s unsecured creditors, is actively supporting the agreement between Delta and its pilots even though the PBGC is a member of the committee.
Founded in 1931, the Air Line Pilots Association ( ALPA) represents 62,000 pilots at 39 airlines in the U.S. and Canada. ALPA represents approximately 6,000 active Delta Air Lines pilots and 500 furloughed Delta pilots. Visit the ALPA website at http://www.alpa.org and the Delta pilots’ website at http://www.deltapilots.org/.
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