Delta Air Lines Inc. pilots represented by the Air Line Pilots Association International are opposing a May 24 PBGC filing seeking to reject a bankruptcy agreement between the Atlanta-based airline and the ALPA, according to a union news release.
Delta last month tentatively agreed to pay ALPA $650 million to settle the termination of the pilots' pension plan, according to court documents. But the PBGC claimed in its motion that the agreement could violate federal law. According to the PBGC filing with the U.S. Bankruptcy Court in New York, the payment to active pilots would essentially favor current employees over retirees, which is "explicitly prohibited by ERISA" and "usurps PBGC's exclusive claim for the total amount of unfunded benefit liabilities."
The ALPA has recommended that the pilots ratify the agreement, according to the release. ALPA spokeswoman Kelly Collins was not available for comment at press time.
Delta had just more than $7 billion in pension assets as of Sept. 30, according to data the airline supplied to Pensions & Investments.