Payout Amounts will Vary

Roughly 6,233 pilots employed by Delta Air Lines, Inc. have opted to sell their individual portions of a $2.1 billion unsecured bankruptcy claim the carrier gave them during pay negotiations in 2006.

Lee Moak, chairman of the executive committee for the Air Line Pilots Association, sent a memo Thursday to the pilots about the deal, but did not disclose just who is buying the claim distributions. Union spokesman Buzz Hazzard described the buyers as "institutional investors" and said he did not how many or who they are, according to the Associated Press.

The Atlanta-based airline plans to exit Chapter 11 on April 30, and the amounts of cash each eligible, participating pilot will receive will vary. The average payout is said to be about $185,946 and is based on the total number of participants and the total amount being paid for the claim distributions -- about $1.159 billion, which works out to about 60 cents on the dollar.

The cash distribution will be based on a pilot's years of service, seniority and their current hourly pay rate, Hazzard said.

The carrier's reorganization plan allows for unsecured creditors to get between 62 percent and 78 percent of the amount of allowed claims. Pilots declining the cash payout -- about nine percent -- of Delta's pilots, will retain their portion of the $2.1 billion unsecured claim. Like any other unsecured creditor, they will receive new shares of Delta stock once the company exits bankruptcy.

"One of the advantages in a claim sale is you get your cash up front and you don't have to wait for the resolutions to take place," Hazzard said.

In the April 2006 deal, in exchange for the $280 million in average annual concessions made by Delta pilots, the airline agreed to give the pilots $650 million in notes, conditioned upon termination of the pilot retirement plan, that was later terminated, and a $2.1 billion unsecured claim for retirement and other payments or distributions.

The union has scheduled a meeting to discuss how the $650 million in notes will be distributed to the pilots, Hazzard said.

A confirmation hearing on the airline's reorganization plan is scheduled for April 25 in US Bankruptcy Court in New York. Since the bankruptcy filing in September 2005, Delta now estimates it will be worth $9.4 billion to $12 billion when it emerges from Chapter 11.

FMI: www.delta.com, www.alpa.org