Judge OKs Delta's severance package

0 Comments | Deseret News (Salt Lake City), Feb 23, 2006 | by Aleksandrs Rozens Associated Press

NEW YORK -- A New York bankruptcy judge approved a Delta Air Lines Inc. severance package for directors and officers that is part of a plan to save the carrier $200 million annually.

The airline, which filed for bankruptcy protection in September, had asked for court approval to provide severance for as many as 144 directors and officers.

The carrier, which operates a hub at Salt Lake City International Airport, does not expect to actually terminate 144 directors and officers, Dan Lewis, spokesman for Delta, told The Associated Press. He said the carrier likely will cut 20 percent of that 144 total, costing Delta $3 million in expenses related to severance payments.

"I don't believe I have any choice but to grant the motion. The debtor has made a very compelling showing on record before me of the need for the severance plan that has been proposed," Judge Adlai Hardin, who is overseeing Delta's bankruptcy, said in granting the carrier's request.

The pilots union, the Air Line Pilots Association, asked the court to reject the Atlanta-based company's severance proposal in light of Delta's request for pilot concessions. An attorney for the pilots, Michael Winston, likened the plan to a "soft landing" for management and said the carrier's management should have consulted the pilots union about it.

Under the plan, directors and officers would receive six to 12 months of severance pay.

Delta, though, argued the severance plan was meant to stem departures of directors and officers. Lewis told the AP that the carrier has lost six executives to other companies in January and February alone, including a specialist involved with managing the airline's restructuring efforts.

Lewis said the cuts could begin as early as March. If all 144 employees eligible were terminated under the program, the cost to Delta would be $14.2 million, the company has said.

"We are pleased that the judge's ruling recognized the sound business judgment and the sacrifice of everyone at Delta," said Lewis. "We need to move forward with the restructuring of the company."

A spokesman for the pilots union expressed disappointment with the judge's decision Wednesday.

"We are disappointed that management appears oblivious to the impact this (severance) program will have on employee morale," said Capt. John Culp.