Delta Air Lines Inc., Atlanta, cannot predict whether its defined benefit plans will continue after the company emerges from Chapter 11 bankruptcy protection, according to the company's third-quarter report filed today with the SEC. If the plans continue, the filing said, "we may be required to fully fund required contributions at that date, including contributions related to benefits earned prior to" Sept. 14, the day that Delta filed its Chapter 11 bankruptcy petition. Company officials estimated total defined benefit funding requirements of about $3.4 billion for 2006 through 2008, according to the report.
Delta executives expect the company will contribute $35 million to its defined contribution plans in the fourth quarter, but contributions to defined benefit plans in the quarter will be "immaterial," the filing said. Delta officials believe the carrier isn't required to contribute to the defined benefit plans at this time because "substantially all of these funding requirements relate to benefits earned prior to" the company's Sept. 14 Chapter 11 bankruptcy petition, according to the filing.
The carrier, which filed for Chapter 11 bankruptcy protection Sept. 14, contributed about $325 million to its defined benefit plans during the first nine months of 2005 and roughly $65 million to its defined contribution plans over the same period, the filing said. Delta contributed about $225 million to its defined benefit plans in the first half of the year and about $90 million to its "other pension plans" during that period, according to the carrier's second-quarter report.
Separately, Delta posted an $86 million settlement charge in the third quarter related to lump-sum payments under the pilots' pension plan for pilots who took early retirement.
Delta's defined benefit and defined contribution assets totaled roughly $7 billion and $4 billion, respectively, as of Sept. 30, according to Pensions & Investments data.