Seek End to Pilots' Pension Plan
By AOIFE WHITE, AP
Saturday, June 2, 2006
PARIS (June 2) - 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
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
A union spokeswoman, Kelly Collins, had no immediate comment
when reached by telephone Friday.
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
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
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
"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."
Separately, Delta has said it supports making it easier for
a foreign investor to invest in a U.S. airline within
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
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."