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WASHINGTON--The Pension Benefit Guaranty Corp. has taken over and terminated Delta Air Lines Inc.'s massively underfunded pension plan covering the airline's pilots.
The Delta plan, which covers about 13,000 active and retired pilots, is underfunded by about $3 billion, with $1.7 billion in assets and $4.7 billion in benefit obligations. PBGC will be liable for about $920 million, the sixth-largest loss in the PBGC's 32-year history.
Earlier, Delta said shedding the plan was essential for the Atlanta-based airline to emerge from Chapter 11 bankruptcy. Delta, though, is continuing another pension plan covering other employees. A provision in a 2006 law gives commercial airlines much more time--compared to other employers--to fund their pension plans.
Delta is the latest major airline to have at least one of its pension plans taken over by the PBGC.
Among airlines now operating, the PBGC has taken over all of United Airlines' pension plans, costing the agency $6.6 billion; those sponsored by US Airways Group Inc., at roughly a $3 billion loss; and Aloha Airlines Inc., whose plans had $117 million in unfunded PBGC-guaranteed benefits.
The PBGC also incurred big losses through its takeover of pension plans sponsored by several long-defunct airlines, including Braniff International Airways Inc., Eastern Airlines Inc., Pan American World Airways and Trans World Airlines Inc.
In all, about 38% of the PBGC's $18.1 billion deficit is attributable to airline pension plan failures, a PBGC spokesman said.