Creditors of Delta back pension skip

Creditors of Delta Air Lines Inc., which filed for bankruptcy last month, support the airline's decision to skip an October contribution to the company pension plan, arguing the payment would unfairly favor retired pilots.

The Delta Pilots' Pension Preservation Organization asked the U.S. Bankruptcy Court to order the payment after the company informed pensioners in a Sept. 15 letter that it didn't plan on making the contribution. The pilots argued that a failure to make the contribution might prompt the Pension Benefit Guaranty Corp. to terminate the airline's retirement plans.

The airline's committee of unsecured creditors, in a court filing Wednesday in New York, said forcing Delta to make the contribution would allow the retired pilots to receive payments while other creditors remain unpaid -- a violation of U.S. bankruptcy law.

"The committee is sympathetic to the arguments on behalf of the retired pilots and understands how important the pension payments are," creditor lawyer Lisa Beckerman said in court papers. "Unfortunately, there is simply no basis to compel the debtor to continue to make such payments or to treat the pilots more favorably than all of the debtor's other unsecured creditors."

The Atlanta-based airline, which operates a hub at Salt Lake City International Airport, needs court permission to make the payments and, citing financial pressures, hasn't made such a request. U.S. Bankruptcy Judge Prudence Carter Beatty will consider the issue at a hearing later this month.

Delta Chief Executive Gerald Grinstein said in a Sept. 15 letter that the airline won't make pension contributions because of the "need to preserve as much cash as possible."

Delta's 7.78 percent notes maturing in November fell 8 cents to 52 cents on the dollar on Trace, the bond-price reporting system of NASD. Delta shares closed unchanged at 79 cents Wednesday in New York Stock Exchange composite trading.

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