Delta Airlines 2005 Annual Report Download - page 25

Table of Contents
ITEM 3. LEGAL PROCEEDINGS
Chapter 11 Proceedings
As discussed above, on September 14, 2005, we and certain of our subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The reorganization cases are being jointly administered under the
caption "In re Delta Air Lines, Inc., et al., Case No. 05-17923-ASH." The Debtors continue to operate their business as "debtors-in-
possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code
and orders of the Bankruptcy Court. As of the date of the Chapter 11 filing, virtually all pending litigation (including actions described
below) is stayed, and absent further order of the Bankruptcy Court, no party, subject to certain exceptions, may take any action, also
subject to certain exceptions, to recover on pre-petition claims against the Debtors. At this time it is not possible to predict the
outcome of the Chapter 11 filings or their effect on our business.
Coincident with the Chapter 11 filing, we stopped making contributions to our qualified pension plans and payments from our
non-qualified pension plans for benefits earned prior to the filing. In September 2005, the Delta Pilots Pension Preservation
Organization ("DP3"), an organization consisting of retired Delta pilots, filed a motion in the Bankruptcy Court to compel the
continued payment of collectively-bargained pension benefits to retired pilots. Specifically, DP3 sought an order requiring us to
(1) continue making non-qualified pension payments to retired pilots; and (2) make required contributions to the qualified pension
plan for benefits earned prior to the Petition Date. DP3 argued that because Delta had not rejected its collective bargaining agreement
with ALPA, and because such agreement required us to maintain both the qualified and non-qualified plans, we had to continue such
payments regardless of the bankruptcy filing until the time Delta rejected the collective bargaining agreement with ALPA. DP3's
motion was supported by Fiduciary Counselors, the independent fiduciary for the qualified pension plan, and ALPA. We and the
Creditors Committee opposed the motion on the basis that the requested contributions and payments were for benefits that were
earned prior to the Petition Date, and under controlling law, we were not required to make such payments at that time (and still are not
required to make such payments).
In October, the Bankruptcy Court denied DP3's motion on procedural grounds and DP3, joined by Fiduciary Counselors and
ALPA, filed an appeal of that decision to the United States District Court for the Southern District of New York. The appellants have
filed opening briefs with the District Court in which they also urge the District Court to decide the case on the merits, and not
necessarily restrict itself to the procedural issue relied on by the Bankruptcy Court in its decision. Delta has filed its opposition brief.
In December 2005, subsequent to the Bankruptcy Court's decision on the DP3 motion, several individuals, all of them retired Delta
pilots, commenced an adversary proceeding in the Bankruptcy Court on behalf of themselves and a class consisting of approximately
5,800 retired Delta pilots and their survivors, raising issues substantially overlapping with those raised by DP3's motion. In
January 2006, on Delta's motion, the Bankruptcy Court extended Delta's time to answer or otherwise move with respect to this class
action until thirty days after the District Court's resolution of the appeal concerning the Bankruptcy Court's ruling on DP3's motion.
In Re Northwest Airlines, et al. Antitrust Litigation
In June 1999, two purported class action antitrust lawsuits were filed in the United States District Court for the Eastern District of
Michigan against Delta, US Airways and Northwest.
In these cases, plaintiffs allege, among other things: (1) that the defendants and certain other airlines conspired in violation of
Section 1 of the Sherman Act to restrain competition in the sale of air passenger service by enforcing rules prohibiting certain
ticketing practices; and (2) that the defendants violated Section 2 of the Sherman Act by prohibiting these ticketing practices.
Plaintiffs have requested a jury trial. They seek injunctive relief; costs and attorneys' fees; and unspecified damages, to be trebled
under the antitrust laws. The District Court granted the plaintiffs' motion for class action certification and denied the airlines' motions
for summary judgment in May 2002. On May 4, 2004, the District Court issued a supplemental order defining various plaintiff
subclasses. The subclasses 20