Letter from Will Buergey

November 12, 2006

 

 

 

Thanks to all of our financial contributors who have made it possible for us to appeal the Bankruptcy Court decision that Delta has satisfied the very strict requirements for a voluntary distress termination of the Delta Pilot Defined Benefit Pension Plan.

 

As you know, our briefs outlining our arguments in favor of the Federal District Court overturning the Bankruptcy Court decision were filed on October 31, and this week the reply briefs for Delta are due to be filed.  After Delta files its reply briefs, our attorneys will have an opportunity to address any issues raised by the company in those briefs.

 

Delta has requested that the court schedule a hearing as soon as possible, and we have not opposed that request, so we assume that a hearing might be scheduled for sometime early next month. 

 

At this time the PBGC has not agreed to assume the plan, which is the next step in a distress termination, and the agency still has an appeal opposing the terms of the agreement reached in LOA 51 that compensates only the active employees if the pilot pension plan is terminated.

 

As you know, the bankruptcy process is very expensive and our major expense in fighting the termination has been our attorney fees.  I was feeling pretty bad about our legal expenses until I saw the latest figures from the company.  While Delta claims that they cannot afford to fund our pension plan in bankruptcy, they have now run up almost $100 million in legal fees since they filed for bankruptcy last September.  It is ironic that Delta's legal expenses closely parallel the cash value of the pilot non-qualified benefits that they have refused to pay since last October 1. 

 

You could say that Delta is funding the cost of this bankruptcy on the backs of the retired pilots, although to be fair we must acknowledge that the active pilots have also made significant contributions.  The difference between the retired and the active pilots is that they had a vote to accept or reject their contractual changes, they received compensation for the pension termination, and they have plenty of opportunities to receive a return on their investment in Delta's future, while we will be stuck forever with the pension termination unless we can successfully reverse the Bankruptcy Court decision.

 

I feel that our ALPA representatives failed to realize the precedent they were setting by allowing Delta to terminate the pensions of the only major group that had negotiated for those benefits.  When other unions attempt to organize the non-contract Delta employees, you can bet that management will remind them that in 2006 only the organized pilots lost their pensions.

 

For almost all other Delta employees, their pensions were "gifts" from management with no contractual obligation to pay those benefits, only the pilots gave up other items during every contract negotiation to maintain or improve our pension benefits, this is further evidence that neither contractual nor moral obligations mean much to current Delta management.

 

For those of you who are curious about our financial condition, so far we have expended $96,905.89 in September and October in legal fees, plus $16,370.25 for the Bankruptcy Court objection to the pilot medical changes which is being paid out of a separate account.  Thankfully, your generous contributions are maintaining a positive balance in our escrow account for the pension appeal.  As I have said on many occasions, I would prefer to have relatively small contributions from all retired pilots rather than larger contributions from a smaller group of supporters.  The key to reduce the amount of money required from each contributor is to continue to recruit new supporters to help us in this effort.

 

Thank all of you for your superb efforts in contacting members of congress.  Our movement is gathering positive momentum and I have received numerous calls from congressional representatives requesting further clarification of what we are attempting to achieve.  It is amazing how many members of congress feel that they were duped by Delta when they awarded our company seventeen years to fund its pension plans, believing that Delta would use that time to make good on all of its pension promises.  Wendell Lewis and several other volunteers will visit Washington this week to hand deliver our petitions to the appropriate members of congress.

 

On the heels of our successful campaign to contact congress, I would like to give you a new assignment this week.  As some of you know, we have been assisted by a lobbyist working behind the scenes in Washington to help us develop a winning strategy to support our efforts.  Prior to last week's elections this lobbyist realized that there was a very real possibility that the Democrats would gain control of one or both houses of Congress.  The Washington insider told me that this would present a perfect opportunity to lobby the President directly to ask his assistance in persuading the Republican Committee Chairmen to address our concerns before the Democrats take over the committee structure in January.

 

The President made comments supportive of ensuring the security of employee retirement benefits during the negotiations for the new pension legislation, stating that companies that make promises to their employees should be required to keep them.

 

Letters to the President should contain the same basic information included in the letters to congress while asking him to direct the current Republican Committee Chairmen to address the Delta Pilot pension issue during the current session of congress.  I am attaching a document originally conceived by Bill Dvorak, that will help consolidate some of the material we have already provided to you.  The mailing address for the President is:

 

President George W. Bush

The White House

1600 Pennsylvania Avenue NW

Washington, DC 20500

 

And the email address is: comments@whitehouse.gov

 

Anyone who has not yet made a contribution to help fund our efforts is reminded that contributions can be mailed to, and checks made payable to:

 

Sapir & Frumkin LLP

399 Knollwood Road; Suite 310

White Plains, NY 10603

 

Mark the memo line: "Delta Pension Appeal" and the money will be held in an escrow account to pay our legal expenses.

 

Thanks again for your support, and in closing I must tell you that I have been swamped with email messages over the past few weeks.  In an effort to free up more time to devote to other aspects of this program, I will no longer answer every email message, but instead will try to combine questions that can be answered in a group reply. 

 

Thank you for your understanding.

 

Will Buergey

 

 

 

MEMORANDUM IN SUPPORT OF PRESERVING THE DELTA PILOTS PENSION PLAN

 

 

FACTS:

 

Delta Air Lines received tentative approval from the Bankruptcy Court for a voluntary distress termination of the Pilots Defined Benefit Pension Plan effective September 2, 2006.  Delta argued that distress termination of the Pilots Pension Plan was necessary primarily because the Pilots Pension Plan contained a provision requiring Delta to offer each retiree the option of taking approximately fifty percent of his retirement benefit in a lump sum distribution. In the past, most retiring pilots had elected the lump sum option. The Pilots Pension Plan was significantly under funded due to a number of factors, including the large number of pilots who had exercised the lump sum option just prior to Delta's bankruptcy filing, together with Delta's refusal to fund the plan after the company's bankruptcy filing in September 2005. The Pilots Pension Plan is the only employee pension plan which Delta has sought to terminate because it is the only Delta plan with a lump sum provision.

 

The Pilots Pension Plan has not yet been accepted by the Pension Benefit Guarantee Corporation (PBGC). As a part of contract modifications agreed to last spring between the Air Line Pilots Association and Delta, the company agreed to execute a note in the sum of $650 million for the benefit of active pilots only, and allow only active pilots a claim in bankruptcy of $2.1 billion. 

 

In exchange for these incentives, the Air Line Pilots Association agreed not to contest termination of the Pilots Pension Plan. The PBGC has objected to the $650 million payment and $2.1 billion claim to the active pilots, asserting that they violate ERISA law by diverting assets to the benefit of working employees that should first go to retired employees if the pension plan is terminated. 

 

The PBGC has appealed the Bankruptcy Court decision approving this arrangement, while a group of retired pilots has appealed the Bankruptcy Court decision that Delta meets the strict standards for a voluntary distress termination. The Pension Protection Act of 2006 (P.L.109-280) was signed into law on August 17, just weeks before Delta sought court permission to terminate the pilot pension plan which ironically occurred over Labor Day weekend..

 

ARGUMENTS:

 

 The termination of the Delta Pilots Pension Plan would cause the taxpayers a financial obligation that could be eliminated if a correction is made to the Pension Protection Act Congress just passed.    The Act provided for either ten (10) year or seventeen (17) year amortization schedules for unfunded pension liabilities.  Delta is eligible for the seventeen (17) year amortization schedule, but chose not to utilize it for the pilot pension plan because of the lump sum provision in the pilot's retirement plan.

 

 American, Continental and Northwest Air Lines will be at a significant competitive disadvantage if Delta is allowed to terminate its Pilot Pension Plan.  American, Continental, and Northwest could be tempted to terminate their plans to remain competitive with Delta, which would create additional burdens on the already stressed PBGC and thus increase the likelihood of PBGC collapse and a subsequent taxpayer bailout of the agency.

 

 Delta will soon emerge from bankruptcy a leaner and stronger carrier.  Operating costs have been significantly reduced, much waste has been eliminated, the route network has been reworked to increase both revenue and passenger load factors, and fuel expenses have dramatically decreased.  In fact, in the most recent quarter Delta has reported its first operating profit since before filing for bankruptcy protection.

 

 PROPOSED SOLUTION:

 

A technical correction or change to the Pension Protection Act prohibition on lump sum payments will make it possible for Delta to save the pilots pension as the company agreed to do for all the rest of their employees.   The current bill already contains a provision to forbid lump sum payments by under funded plans, but that provision is not effective until 2010 for collectively bargained pension plans.  Request is made that the following language be added to the beginning of Section 103 (c) (1) and Section 103(c) (2) of the Pension Protection Act making lump sum suspension available immediately in special circumstances:

 

Except for the Plans of companies that have declared bankruptcy and where the only alternative to the prohibition of lump sum payments is plan termination, in which case the prohibition on lump sum payments is effective as of the date of signing of the original legislation.  (August 17, 2006.)

 

Thank you for your consideration.

 

 

Message from Daryle McGinnis

 

Daryle is a retired pilot and formal DFW LEC

 

Will Buergey s group is probably the only recourse left if you want to fight the pilot s side in the bankruptcy and do not care for the way DP3 has done it.  DP2 ran out of money but would have, many think, garnered much more had they been able to go a little further.

 

Buergey s group is now away to do that.  Will is unique in that he has been fighting on his own, has not accepted offered settlement money, and has persevered, in still is, in actually preserving our pension plan.  This week he filed what was necessary to continue to try to do that. 

 

Beyond pension there will be inevitable follow-on attacks against retired pilots.  Bankruptcy is a wide open come and get it forum that allows coming and getting on a scale surpassed only by open warfareand it s not that far removed.  I think Buergey will continue fighting these coming attacks as long as he can and on an as-he-goes basis.  And, as he goes, he probably needs everyone who still wants to fight going with him.

 

Daryle McGinnis

Darylemcginnis@aol.com