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.