PBGC, Bankruptcy Court Will Have To Approve

Delta Air Lines has reached a tentative agreement with the federal agency that insures corporate pensions. On Monday, the Pension Benefit Guaranty Corporation gave its conditional approval to assume control of the pilots' pension plan.

Reuters reports that under terms of the agreement, the PBGC would be granted a $2.2 billion unsecured claim against the carrier. That would the government entity Delta's largest single creditor.

Delta has sought to terminate its existing pension plan as part of its Chapter 11 bankruptcy reorganization. United Airlines reached a similar agreement with the PBGC two years ago, during that carrier's fight to emerge from bankruptcy.

The agreement between Delta and the PBGC must still be formally vetted by the staff at the pension board, who must decide whether Delta's case meets its "financial distress" criteria. The US Bankruptcy Court would also have to sign off on the agreement.

While it has abandoned hopes of retaining pensions for its pilots, Delta stressed it remains committed to funding pensions for its flight attendants and ground staff.

FMI: www.delta.com, www.pbgc.gov