Union: At least 100 Delta pilots to retire as pay cuts start

<p>At least 100 Delta Air Lines pilots are expected to retire effective Wednesday, the start date for a 32.5 percent pay cut agreed to in a $1 billion concessions package to help save the struggling carrier from bankruptcy.</p><p>Union spokeswoman Karen Miller said the exact number and the breakdown of early retirements versus normal retirements would not be known until midnight Tuesday. But she said she expects the total number of retirements to be at least 100.</p><p>"We do anticipate there will be a higher number of early retirements for Dec. 1 than we have experienced for several months," Miller said.</p><p>Delta warned about the consequence of the continued wave of retirements in a recent regulatory filing.</p><p>"If our pilots retire prior to their normal retirement at age 60 at greater than historical levels, this could disrupt our operations," Delta said in a Nov. 15 Securities and Exchange Commission filing.</p><p>To try to ease staffing shortages, the nation's third-largest airline in late September reached an agreement with the pilots union to allow early retired pilots to return to duty on a limited basis. But the program is voluntary for pilots, who can choose to participate by signing a waiver before retirement, the union's Miller said.</p><p>Only three of 71 pilots who retired early on Oct. 1 were rehired pursuant to the agreement, according to the SEC filing. The airline has not said how many of the 55 early retirements in November agreed to return.</p><p>Asked about the impact of Wednesday's expected retirements on Delta's operations, a company spokeswoman had no immediate comment.</p><p>The news comes a few weeks after pilots ratified the pay cuts agreement with management. The cuts will remain in effect until 2009. Pilots also agreed to a 16 percent reduction in vacation pay, changes to the composition of the pension plan and increased cost sharing for active pilot and retiree medical benefits.</p><p>Without the $1 billion in concessions, Atlanta-based Delta warned that it would have to seek bankruptcy protection. Even with them, the airline could still be forced into Chapter 11 because of its $20.6 billion in debt.</p><p>The normal pilot retirement age at Delta is 60. Senior pilots with enough years in can retire early at age 50, and about 2,000 of the airline's roughly 7,000 active pilots were eligible to do so as of mid-November, Delta regulatory filings show. The total number of active pilots has fluctuated in recent months because of the retirements and because of furloughed pilots who have returned to duty.</p><p>Pilots who retire effective Dec. 1 will receive retirement benefits based on their salaries before the pay cuts, Miller said. Even after the reduced pay rates hit, Miller noted that pilots who retire over the next few years will not be affected much. That's because a Delta pilot's retirement is based on the top paying 36 consecutive months in his last 10 years.</p><p>Delta pilots who retire can elect to receive 50 percent of their pension benefit in a lump sum and the other 50 percent as an annuity later, regulatory filings show.</p><p>Pension benefits paid to Delta pilots and other retirees was $1.1 billion in 2003 and $888 million the year before, regulatory filings show. The airline has not said how much it expects to pay out by the end of this year. In the Nov. 15 SEC filing, it said it expects its pension obligations to be $500 million to $550 million in 2005 and for them to be "significant" from 2006-2008, though it did not provide specific figures.</p><p>Ninety-nine pilots retired Oct. 1, 71 of which were early retirements. On Nov. 1, 69 pilots retired, 55 of which were early retirements. Since Jan. 1, there have been 694 retirements, of which 506 have been early retirements.</p><p>Joel Denney, an airline analyst for Piper Jaffray & Co. in Minneapolis, said he believes Delta is making progress on its transformation plan.</p><p>"At this point, my expectation is there's more going on behind the scenes that's continuing to move things forward and get their costs under control and get in a position to be able to be a survivor," Denney said. "The bottom line is you have to give yourself breathing room."</p><p>Shares of Delta were down 4 cents at $6.95 in afternoon trading Tuesday on the New York Stock Exchange.</p><p>___</p><p>On the Net:</p><p>HASH(0x28649ac)</p>

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