Legislation that would allow struggling Delta Air Lines Inc. to spread out the funding of its pension program is a key factor as it tries to avoid bankruptcy, but not the only one, the company's chief executive said Monday.
Following a pep rally of sorts to thank Georgia's congressional delegation for its support of the legislation, CEO Gerald Grinstein said fuel is as much a pressing concern to Delta as its pension obligations.
"Pension reform is certainly a vital one, but fuel price is, too," Grinstein told reporters when asked if the airline would be forced into bankruptcy if the pension legislation doesn't pass.
He added, "We're trying to get as much time as we can."
Asked how quickly Delta needs to get the pension reform for it to have a positive impact on the nation's third-largest carrier, Grinstein said, "As soon as possible."
Pressed on how late is too late, Grinstein said, "I don't want to get into an issue like that."
Last week, Delta's future grew more uncertain as it posted a $388 million second-quarter loss to push its red ink to nearly $10 billion since early 2001.
The Atlanta-based airline almost fell into bankruptcy last October before winning deep concessions from pilots. Now, because of persistently high fuel prices, Delta is again in danger of bankruptcy.
Some analysts believe Delta, which said in the spring that it faces $3.1 billion in pension payments over the next three years, will be forced into Chapter 11 if Congress doesn't enact meaningful pension reform by this fall.
Delta supports a bill sponsored by Sens. Johnny Isakson, R-Ga., and Jay Rockefeller, D-W.Va., that would give airlines the option of spreading the funding of their pension plans over 25 years instead of four.
The pension reform legislation would require airlines to agree to limit their pension liability by partially or totally freezing current benefits. Employees would be eligible for the benefits they've earned up to the date of the freeze but no additional benefits would accrue unless the airline pays for them immediately. An airline would have to get the approval of its employee unions before choosing one of the options in the bill.
Some lawmakers have been critical of the legislation, likening it to a form of another bailout for the struggling airlines. At a Senate Finance Committee hearing last month on the issue, one Republican senator suggested that if the airlines get the reform they're looking for, Congress would be rewarding poor management in the industry.
But Isakson and other members of Georgia's delegation said at Monday's event at Delta's headquarters that the airlines need pension reform because of unexpectedly high fuel costs and other factors beyond their control.
Grinstein agreed.
"This company has made commitments to you and we want to be able to fulfill them," Grinstein told several hundred employees at the gathering.