Delta shareholder wants say in Northwest merger talks

0 Comments | Deseret News (Salt Lake City), Mar 8, 2008 | by Bloomberg News

The Pension Benefit Guaranty Corp., Delta Air Lines Inc.'s second- largest shareholder, wants a role in the carrier's merger talks with Northwest Airlines Corp. to safeguard retirement benefits of more than 160,000 workers.

The airlines' pensions lack enough assets to pay promised benefits and would be underfunded by more than $7 billion should the carriers terminate the plans, the PBGC said in a Feb. 28 letter to Delta Chief Executive Officer Richard Anderson and Northwest CEO Doug Steenland. The merger has been delayed while pilots try to mesh their seniority lists, people familiar with the talks have said.

The agency, formed by the U.S. government to insure pensions, must make sure the carriers consider how a tie-up would affect retirees, PBGC director Charles Millard wrote. Delta and Northwest used a 2006 law letting them make smaller pension contributions over a longer period while in bankruptcy.

Airlines only are allowed to terminate pension plans in bankruptcy, not as part of a merger, said Betsy Talton, a spokeswoman at Atlanta-based Delta.