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Delta OKd to Stop Payments

October 18, 2005|From Reuters

A U.S. Bankruptcy Court in New York on Monday approved Delta Air Lines Inc.'s decision to halt payments to its pilots' pension plan, rejecting their bid to force the Atlanta-based carrier to keep funding it.

The ruling by U.S. Bankruptcy Judge Prudence Beatty freed Delta, which sought bankruptcy protection last month, from having to pay $160 million to its main pilots' $1.9-billion pension plan that was due on Oct. 15, as well as additional monthly contributions.

Delta lawyers successfully argued that without the freeze, the airline could have owed as much as $1 billion to its main pilot pension plan by January.

Beatty ruled that Delta should be focused on its overall restructuring rather than retiree payments and noted that the main pension plan will for now continue to pay out full benefits.

"If they can't get the fare and cost structure to work, it's all over," Beatty told a lawyer for the pilots.

The airline's move is part of its plan to reorganize and slash costs to emerge from bankruptcy on a firmer financial footing.

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