Letter to PBGC from Retired Captain Kerin L. Shaughnessey
November14, 2006
PBGC
PO Box 151750
Alexandria, Virginia
22315-1750
PBGC Board Members,
I am a military vet and served six years in the 186th Army
Aviation Guards in Burlington, Vermont. In 1966 I was hired as a commercial pilot, and flew
for 36 years. I retired with Delta Air Lines on December 1, 2002 as a captain
on the B-777. I flew as a captain
for 23 of those 36 years with the company. According to the contract I retired under signed in June
2001, I more than qualified for a retirement pension. I met the criteria of 25 years of service by more than 11
years. I was over the age criteria
of 50 by almost 9 years. I retired
exactly 13 months prior to the government mandatory retirement of age
60. Under the contract with Delta
leaving 13 months early cost me a 3% reduction in my pension retirement.
Now that the courts have given the okay for Delta to drop
the retired pilots pension plan I have lost approximately 85% of my earned
pension. Over 1300 of the retired
pilots age 65 and over have had very little change to their pension check. Many of these pilots have
just over 25 years of service and never flew the larger equipment which under
the PWA/ contract determines a more substantial annuity in retirement. Nevertheless, these retirees are
continuing to receive their pensions pretty much intact while I, and many other
like myself, have been unfairly penalized due to our younger age. This is clearly a case of age
discrimination.
My father who retired from Delta, as a captain on the
L-1011, in November 1979 and died in July 1988 received approximately $4,000.00
less a year in his pension annuity when he retired than I was receiving in my
retirement annuity.
According to Deltas interpretation of the PBGC rules his widow receives
one half his annuities which are approximately 5.2 times what I am now
currently receiving in retirement.
This further illustrates the case of age discrimination. (I want to state very clearly I am not
stating in any manner these retired pilots and widows do not deserve their full
pensions. Their pensions were
earned, and therefore deserved.)
This case is just another example to demonstrate how unfairly age plays
into the interpretation of Deltas calculations when it comes to figuring the
PBGC guidelines. Delta did not
take into account our contracted criteria when figuring the value of the
individual pension annuities when they sent the October 2006 checks.
Deltas termination of the Retired Pilots Pension Plan does
not meet the ERISAs distress test or the debtors burden of proof for their
dumping the Retired Pilots Pension Plan on the PBGC and the US taxpayers. Delta chose to pay the active ALPA
pilots $650 million dollars for their pension plan plus a promise for active
pilots only in a claim in bankruptcy of $2.1 billion. This is a clear violation of the ERISA guidelines which
states in bankruptcy retired employees are taken care of first, prior to
active employees. There obviously
was some sort of bribe associated with the active pilots which is a violation
of the law.
ALPA negotiated the language and conditions for the pilots
and the retired pilots in their PWA (Pilots Working Agreement) contract of
June 2001. This contract of 2001
was the bible that set the standards/conditions of my retirement with the
company in 2002. However,
ALPA refused to defend the contract as it related to the retired pilots in the
bankruptcy proceedings, and then they turned around and made a deal with Delta
not to fight the termination of the Retired Pilots Pension Plan. Instead ALPA
chose to make a lucrative deal with Delta for the active pilots to the tune of
$2.75 billion. Unfortunately for
the retired pilots, ALPA has a history of not always bargaining appropriately
for its membership.
Delta stated in the bankruptcy court the average retired
pilots would be receiving approximately $75,000 per year after termination of
the plan. This was printed in several papers across the US. Why did the attorneys for Delta state
this in court---------for whose benefit was this false statement made??
Delta chose to terminate the unsecured portion of the
pilots pension plan prior to the PBGC taking over the pension plan. This was the first time any airline had
ever terminate the unsecured portion of the pension plan prior to the PBGCs
acceptance of the plan. This
action violated labor laws.
However, Delta cherry picked a portion of the contract to terminate
while the contract was still in effect.
Procedurally Delta should have waited until the whole contract was
terminated, but instead chose to do things their way.
DP3 was established to preserve the pensions and benefits of
the retired pilots. The leaders of
the group are mainly ex-Delta management personnel. The group is composed mostly of pilots on disability, and,
or over age 65. This group never
once opposed Delta in the termination of the pilots pension plan. Everything they did was done on their
own. They never asked nor sought any
direction from their membership group.
They appeared to be predisposed in the direction they were taking, and
the direction they took was not beneficial to the retired pilots.
Right now Delta is expanding. They have recalled 1,000 furloughed flight attendants and
roughly 130 pilots so far this year.
Delta is growing their international operations, and Delta just posted
earning $52 million in the third quarter of 2006. In the new Pension Protection Act that was recently passed
by Congress Delta received a 17 year amortization schedules for unfunded
liabilities. Delta is eligible for
the 17 years amortization schedule, but they have chosen not to utilize
it. They have chosen instead to
terminate the Retired Pilots Pension Plan and dump it on the PBGC.
Deltas major claim in bankruptcy court was they needed to
terminate the retired pilots pension plan because of the lump sum
provision. Delta claimed, if they
did not terminate the plan, a large number of retiring pilots would prevent
them from emerging from bankruptcy because of the flow of money in the lump
sums provision to the eligible pilots.
This is a false claim because nowhere in court was it proven 800-1000
eligible pilots would retire if given the chance to utilize the lump sum
provision. No study or thorough
research was ever carried out.
Again they made inflated statements to make Delta look better in the
eyes of the court.
Why did Delta single out only the Retired Pilots Pension
Plan in the bankruptcy proceedings? I suspect Delta felt the retired pilots are an
easy prey. They know we can not
recoup our losses because age and our profession prevent us from continuing
work in our chosen field. As a
group, we are a scattered all over the US, and we now no longer have the
financial means to fight corporate giants, like Delta. We have no
representation in our fight because ALPA has rejected the retired pilots every
step of the way, and DP3 never kept their promise to fight and preserve our
benefits and retirement plan.
They preserved nothing!
The retired pilots were an easy mark, and if their pension plan is
terminated, Delta gets a free loan from the US taxpayers amounting to $2.4
billion. Not bad, but it was done
on the backs of the retired pilots.
Please remember in your deliberations of facts pension
benefits are contracted for in lieu of salary. They are not giveaway
programs. Also, every time a
company walks away from a pension plan there is less retirement security for
everyone. Stripping this security
away is a real threat to America and its economic future. Please right this
wrong and hold Delta accountable to its retired pilots who have earned the
right to keep their pension annuities.
Congress has shown faith in Delta by allowing them an extended 17 year
period of time to fund their under funded pension plans. Delta is rejecting this extension of
time in favor of plan termination.
However unlike Delta, Northwest Airlines, the only other airline to
receive the 17 year extension for under funded plans, is honoring its contract
with all its employees. Please
look at the facts and do not give Delta the right to terminate the Retired
Pilots Pension Plan.
I respectfully thank you for your time.
Respectfully yours,
Retired Captain Kerin L. Shaughnessey
