Delta Air Lines Inc., Atlanta, announced Tuesday its goal to reach an 80% funding ratio for its defined benefit pension plans by 2020.
According to an 8-K filing with the Securities and Exchange Commission, Delta plans to contribute about $1 billion each year through 2020, adding about $250 million each year to the minimum annual required contribution.
Delta also announced it has already contributed “nearly $1 billion” to the pension funds this year, following an announcement in its 10-K filing in February that the company would contribute $925 million to the pension funds in 2014.
Delta contributed $914 million to its pension funds in 2013, which, along with strong market returns and a 90-basis-point increase in the discount rate to 5.01% as of Dec. 31 from the previous year, led to the increase in its funding ratio to 46.9% as of Dec. 31, up from 38.1% at the end of 2012.
As of Dec. 31, Delta's fair value of plan assets totaled $8.94 billion, compared to projected benefit obligations of $19.06 billion.
The target allocation for its pension funds is 23% domestic fixed income, 21% domestic equity, 20% non-U.S. developed equity, 19% alternatives, 6% non-U.S. emerging markets equity, 5% each hedge funds and cash, and 1% high-yield fixed income.
Kay Allison, manager-retirement plans, could not provide further information by press time.
