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Old 06-02-2006, 01:32 PM   #1  
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Default Delta Seeks to End Pilots' Pension Plan

Delta Seeks to End Pilots' Pension Plan
Friday June 2, 4:09 pm ET
By Aoife White, AP Business Writer
Delta CEO Tells AP That Airline Will Seek Termination of Pilots' Pension Plan 'Fairly Soon'

PARIS (AP) -- Delta Air Lines Inc. will file a request to terminate its pilots' defined benefit pension plan "fairly soon," Chief Executive Gerald Grinstein said in an interview Friday in which he also talked about employee pay cuts, his future and whether a merger is a good idea.

Grinstein, in Paris for a meeting with other executives, told The Associated Press that the Atlanta-based airline is in talks with the United States' pension insurer about the pilots' pension.

Asked when the company planned to seek termination of the pension, Grinstein said, "It'll be probably fairly soon."

He said the third-largest airline in the U.S. is keeping the pilots' union informed about the discussions with the Pension Benefit Guaranty Corp.

"We've got a judicial schedule to conform to," he said. "All of those are pieces in motion, but it'll be fairly soon."

It was the first time a Delta executive has said for sure that the airline plans to terminate the pilots' pension. In the past, the company has said only that it would likely seek termination.

Grinstein also said that Delta has no plans to ask its pilots for a third pay cut, and he dismissed the idea, at least for now, that the bankrupt company could merge with another carrier.

Grinstein said the $280-million-a-year concessions agreement that pilots and the bankruptcy court approved Wednesday gives the airline the cost cuts it needs.

"I don't expect to go back to the pilots," Grinstein said. "We have all our people at the market rate. We are going to have to be more efficient both in the way we operate the airline but also in what can be recouped in revenue management, handling the network and utilization of our equipment."

The airline's chief financial officer, Edward Bastian, had been noncommittal when asked in March by AP whether the company might seek a third pay cut from pilots.

The concessions package approved this week, which included an initial 14 percent pay cut and assurances the pilots union won't fight any company effort to terminate the pilots' pension, was the second the pilots agreed to in two years. In 2004, the pilots gave up $1 billion in annual concessions in a five-year deal.

Delta has said previously it expects to emerge from Chapter 11 in the first half of next year. On Friday, Grinstein said Delta's goal is to emerge as an independent standalone company. Mergers are not an option, at least not now, he said.

"Mergers in our industry are very difficult. You'd be hard pressed to name a lot of them that have worked in the long-term sense," Grinstein said.

He added, "Merging work forces particularly when they have different unions and getting the seniority straight in an industry that is so affected by attitude, when your service quality is a derivative of attitude -- it can give you a pause, and in this market place you don't need a pause."

Asked about his future at the airline, Grinstein said he'll "stay until at least we know we're coming out" of bankruptcy. He wasn't more specific.

He said Delta fought long and hard to avoid filing for bankruptcy protection last September, saying it was a very difficult "extremely costly" process that had drained time and energy when the airline needed to turn itself around.

"Obviously I didn't want to file Chapter 11," he said. "It's taken more time than I'd like to have spent doing it ... It's a diversion. You'd like to be doing or thinking about different things and you have to spend a significant part of your energy on that."

If there was a silver lining to bankruptcy, it was putting in place a team of people that were capable of running the airline, he said.

Grinstein was upbeat about the airline's prospects, saying Delta had managed to wrestle revenue costs plus the soaring cost of oil and still post a profit in April.

"I think that we've made remarkable progress," he said.

"In the light of fuel at the levels that it's at, the company was still profitable in April. When the final numbers are out I think you'll see a remarkable change in where Delta is in relation to the rest of the industry," he said.

In approving the pilot concessions deal Wednesday, a U.S. Bankruptcy Court judge rejected claims by the government's pension insurer that it should receive the compensation the pilots were promised if their pension is terminated.

If getting the pilot deal was a success, seeing a bankruptcy court deny Delta subsidiary Comair's request to reject its contract with its 970 flight attendants was one of Delta's failures, Grinstein said. Comair wanted to impose pay cuts the regional carrier says it needs to stay in business.

"There have been some failures too," the Delta CEO said. "We have to recognize that. We have to go back into negotiations on that. I hope we can work that out."
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Old 06-02-2006, 09:44 PM   #2  
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Like we didn't all know this was coming. At least there seems to be a little bit of light at the end of the tunnel to the road to recovery.
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Old 06-03-2006, 08:35 AM   #3  
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Gerry Grinstein has been inferring that this would happen since the day United terminated their plan. No surprise here.
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Old 06-03-2006, 09:48 AM   #4  
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Default Surprises

Originally Posted by CVG767A
Gerry Grinstein has been inferring that this would happen since the day United terminated their plan. No surprise here.
No surprise yet, but if a termination isn't accomplished soon, pesky profits may reappear and complicate the 1114 filing. If the judge were to decide that termination is NOT necessary for the company to successfully reorganize, he might reject the petition. That would give Gerry a BIG surprise. Doubt that will happen though. This has all been carefully planned for years.
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Old 06-03-2006, 12:08 PM   #5  
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I think they'll say we can't get exit financing with the amount of defined benefit liabilities we have. They've been planning this maneuver for two years.
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