Delta retirees seek voice in bankruptcy

About 28,000 Delta Air Lines Inc. retirees have asked a judge for permission to participate in the company's bankruptcy in a bid to protect their pensions and health benefits as the No. 3 U.S. carrier reorganizes.

The Delta Air Lines Retirement Committee, a group that doesn't include pilots, asked U.S. Bankruptcy Judge Prudence Carter Beatty to authorize the formation of an official panel to represent members' interests. Official committees are typically involved in restructuring negotiations and day-to-day matters of a bankruptcy case. Beatty will consider the request next month.

Delta informed the retiree group that it won't make a $135 million contribution to its defined benefit plan in October, the committee said in papers filed with the U.S. Bankruptcy Court in New York. The airline, which operates a hub at Salt Lake City International Airport, also said it will cut medical benefits to the retirees, the group said in court documents.

"The non-pilot retirees bear the economic consequences of these reductions in benefits and the economic risk in the event the pension plan is terminated, and they should have representation," Neil Goteiner, a lawyer for the group with Farella, Braun and Martel, said in court papers. "They have billions of dollars to lose collectively in the bankruptcy if the pension plan is terminated."

Delta's defined-benefit pension plan is underfunded by more than $10 billion, the group said. The majority of Delta's non-pilot pensions are between $1,000 and $2,000 a month, according to the group.

The non-pilot retirees are also represented by law firms Foley and Lardner, and Townsend, Townsend and Crew, according to court papers.

Anthony Black, a Delta spokesman, didn't return calls seeking comment.

The Atlanta-based airline said Thursday that it will eliminate as many as 9,000 jobs and reduce employee and executive pay as part of its restructuring.

Pay for most workers will be reduced by 7 percent to 10 percent, and Chief Executive Gerald Grinstein will take a 25 percent cut in his salary, Delta said in a statement Thursday. The plan will reduce costs and boost productivity by adding profitable international flights, among other steps, in a bid to save $3 billion annually by the end of 2007, the company said.

The latest plan comes in addition to $5 billion in cost reductions and revenue increases the company was targeting for next year. Delta's pilots in 2004 agreed to $1 billion in annual concessions over five years as part of a turnaround plan developed by Grinstein in his first year leading Delta.

A group representing 4,500 retired pilots and their families is also seeking formation of an official committee, according to court papers.

"This once great airline cannot successfully recover if the central focus of the recovery plan remains on pay and benefit cuts from the employees who made it great," John Malone, chairman of Delta's pilots union, said in a statement Friday.

"The pilots have made historic contributions and continue to be loyal to Delta. It's time for management to recognize the employees' enormous previous contributions and focus real attention on the company's suppliers, vendors and lessors, as well as efforts to enhance the revenue stream," Malone said.

Contributing: Lynne Marek

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