Delta pilots sell bankruptcy claim

Delta pilots sell bankruptcy claim

	Published : Thu, 12 Apr 2007 20:08 By : Agencies Print this Story

ATLANTA (AP) - More than 91 percent of eligible Delta Air Lines Inc. pilots have opted to sell their portion of a $2.1 billion unsecured bankruptcy claim the carrier had given them as part of pay cut talks last year, the union said Thursday.

The amount of cash each participating pilot will receive after the Atlanta-based airline exits Chapter 11 on April 30 will vary.

But the average payout would be about $185,946 based on the number of pilots participating -- roughly 6,233 -- and the total amount being paid for the claim distributions -- $1.159 billion. The total value works out to about 60 cents on the dollar.

The actual cash distribution to participating pilots will be based on their years of service, seniority and their hourly pay rate, union spokesman Buzz Hazzard said.

Those pilots who did not opt to take the cash payout will retain their portion of the $2.1 billion unsecured claim. Like other unsecured creditors, once Delta exits bankruptcy they will receive new shares of Delta stock.

Delta's reorganization plan calls for unsecured creditors to get between 62 percent and 78 percent of the amount of their allowed claims in the form of shares.

'One of the advantages in a claim sale is you get your cash up front and you don't have to wait for the resolutions to take place,' Hazzard said.

The chairman of the union's executive committee, Lee Moak, did not disclose in a memo to pilots Thursday who is buying the claim distributions from the pilots. Hazzard described the buyers as institutional investors. He couldn't say how many there are or who they are.

As part of a deal reached in April 2006 for $280 million in average annual concessions by Delta pilots, the airline agreed to give the pilots $650 million in notes, conditioned on termination of the pilot retirement plan, and a $2.1 billion unsecured claim to help the pilots in retirement and for other payments or distributions to pilots. The pilot pension plan was later terminated.

Hazzard said the union was meeting Thursday to discuss how the $650 million in notes will be distributed to the pilots.

Delta has estimated it will be worth $9.4 billion to $12 billion when it emerges from Chapter 11.

A confirmation hearing on the airline's reorganization plan is scheduled for April 25 in U.S. Bankruptcy Court in New York.

Delta, the nation's third-largest carrier, filed for bankruptcy protection in September 2005.