Exodus of Delta Pilots Could Trigger Filing

The Wall Street Journal 09/10/04
author: Evan Perez
(Copyright (c) 2004, Dow Jones & Company, Inc.)

When he isn't flying, Delta Air Lines senior captain Roger Ross taps on his laptop computer to calculate the value of his pension. The 55-year-old pilot is trying to decide whether to retire early, walk away with a lump sum of as much as half his total pension, or to stay and endure what could be a steep cut in pay and benefits as the airline tries to pull out of its financial tailspin.

"I am definitely on the fence," says Mr. Ross, a 25-year Delta veteran who flies Boeing 767 aircraft. "I would file my retirement papers tomorrow if I heard something that made me think I needed to go."

Delta says he and other senior pilots are compounding the financial woes facing the carrier, which has been battered by sky-high fuel prices and ferocious competition from low-fare carriers in recent months. A sudden surge in early retirements -- not sinking fares or its bloated cost structure -- could provide the trigger for a filing in federal bankruptcy court by the nation's third-largest air carrier. Such a surge could come as early as Oct. 1.

Losing a large group of veteran pilots would require the carrier to park some of its most profitable planes if it can't fill their slots quickly. It takes two to three months to fully train a replacement for a senior pilot.

Several factors are hastening the exodus at Delta. It is one of the few major airlines offering retiring pilots the lump-sum option, representing as much as 50% of their total pensions when they leave. Many Delta pilots are grabbing what they can now, fearing the money won't be there later. So far, lump-sum payments for senior Delta pilots have averaged about $900,000 to $1 million.

Further complicating the picture: Delta pilots can retire effective the first day of each month by filing papers as late as 11:59 p.m. on the preceding day. Most tend to file at the last minute.

These guys are in a tough position. Working some 25-30 years and not knowing if your pension will be there a month from now and trying to decide if they should retire.

Perhaps pension plans should not be in the care of our employer, but then again the "benefit" is supposed to be for working for them. Perhaps there is a better way?

I think the working world is going to see some drastic changes over the next ten years. How do we deal with retirement. What is a benefit of working for a corporation and what is a government program (Pensions & Social Security) and how do these programs survive into the future?