wigstheone

Delta Air Lines, while struggling with large losses and reduced capacity, took steps to ensure the stability of its top executives' pension plans, according to the carrier's annual proxy statement...

According to other disclosures Tuesday, the underfunded portion of Delta's pension plan increased to $4.9 billion in 2002 from $2.4 billion the prior year. The eroded funding was due largely to a $718 million investment loss and to a $798 million increase in pension liabilities that resulted when the company voluntarily chose to lower its discount rate to 6.75% from 7.75%. However, with a favorable turn in the financial markets and a rise in interest rates, the underfunding could be reversed quickly.

Although the funded status of the regular pension plan eroded, the company took steps to fund the special pensions of its executives, the proxy shows. Ordinarily, special executive retirement benefits are "at risk," meaning that if a company files for bankruptcy-court protection, the executives could lose some or all of the retirement payments.

However, noting that "the business environment presents ongoing risks and creates a significant concern for retention of management personnel," the proxy discloses that in January 2002 Delta created special individual retirement trusts for 33 executives.

http://online.wsj.com/article/0,,SB1...0.html?mod=DAI

bdschobel

Wow, this is pretty extraordinary. The value of assets set aside for these people may be taxable income (see section 83 of the Internal Revenue Code -- and implementing regulations -- regarding "substantial risk of forfeiture"). Most people aren't willing to take that tax hit, preferring to accept the usually low risk of loss of an unsecured pension in exchange for tax deferral until the benefits are actually paid. This move suggests that the risk of loss is higher than we might want to think. In bankruptcy, unsecured non-qualified pension obligations rank no higher than other unsecured debts to creditors.

Bruce

vetteset

This along with bonuses and payraises for management makes me SICK!!!! There are over 16,000 employees on the street and they keep furloughing more each month. They are SELFISH people and is a truly disgrace to our loyal employees and pax who have been with DL thru thick & thin! SHAME ON YOU!!!!!

vasantn

Sadly, DL is no different from most other major US corporations. They are run for the benefit of their executives, whose mantra is: "Us first, then maybe the shareholders, and screw the employees". Very similar to the people running our country today.


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Vasant

Canarsie

None of this surprises me. Does any of it surprise you?

If I were President of the United States or the Chief Executive Officer of a major corporation, I would most certainly implement operations differently...

CountinPlaces

Ultimately this is an issue for the shareholders. If they allow it to occur, then they are to blame.

Are you a Delta shareholder? Admittedly, it is not an easy process to do grass roots organizing against management.

MileJunkie

I beg to differ. DL and other airlines ARE different, "most other major US corporations" don't get $10B in subsidies, don't constantly ask Gov't for handouts and bailouts.

When I read this article, it made me sick! What cojones they must have, Leo & Co, to give themselves bonuses when their employees are laid off, company stock is down, it's losing money hand-over-fist.

Sick!

Spiff

LemonThrower

I wonder why they would do this? They must know something.

gilpin

This development is truly shameful! Aren't there specific laws to prevent "highly compensated employees" from receiving substantially different pension treatment than others?

Canarsie

I seriously hope this is not the development of another Enron, Worldcom, Global Crossing, etc.

And Delta Air Lines has the absolute audacity to ask for another government bailout!

This whole fiasco is a real insult to SkyMiles members, Delta employees and the taxpayers of the United States - not necessarily in that order.

Am I missing something here?

[This message has been edited by Canarsie (edited 03-26-2003).]

RustyC

This revelation will do great damage to attempts by ANY of the big airlines to get federal relief. Incredibly selfish is right. Definitely explodes the "We're all in this together" myth.

OldRoyal

Unconscionable!

I would think that each of us would want to bring this issue to the attention of our respective Congressional delegations before they decide on any action to subsidize those carriers with an outdated business model!



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"On Va. Ave., loyalty is a one-way street."
--Me

bkkth

Doubt it will do any good, but I went to DL website and sent an email.

brj_slc

I agree with OldRoyal. If a large number of FT members write Senator Frist's Office and their respective Senate/House reps it could at least raise some eyebrows. Espcially if in those letters we detail our objections to a gov't bailout while the Delta (and if applicable other airline) execs are padding their pockets and securing their pensions while front-line employees and the taxpayers/customers take it on the chin. It is fairly easy to send off a letter at both www.senate.gov and www.house.gov