NEW YORK - Delta Air Lines Inc.'s retired pilots should be put ahead of other creditors as the bankrupt airline works out its debt problems, a lawyer for the retired pilots said Wednesday.
Dean Booth, a partner at the law firm Schreeder, Wheeler & Flint who is representing the approximately 4,500 retired pilots, said they are entitled to receive pension payments under a collective-bargaining agreement reached before Delta filed for bankruptcy protection Sept. 14.
He said the payments are effectively akin to salaries of current employees.
"Bankruptcy law requires collective bargaining agreements to be honored unless the agreements are changed by a bankruptcy judge or by consent of the parties," Mr. Booth said.
In the first step toward restructuring Delta's debt, the meeting resulted in the creation of a committee that will represent unsecured creditors.
The committee has nine members, including Boeing Co., the Airline Pilots Association, aircraft-engine maker Pratt & Whitney, the Pension Benefit Guaranty Corp, Bank of New York Co. Inc. and Coca-Cola Co.
The retired pilots are the third-largest creditor based on the current value of their pension benefits, which are estimated at about $1 billion. Delta's total debt is $28.3 billion.
A continuing exodus of Delta pilots has drained the pension plan to the point where future lump sum payouts to retirees by the bankrupt carrier might be in jeopardy, according to the union. Delta has said it does not plan to make the next scheduled contribution to the pension fund.