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Atlanta-Now that Delta Air Lines Inc. has filed for Chapter 11 bankruptcy protection, the carrier will have a legal fight on its hands from employees and retirees seeking to protect their benefits, legal experts said. Delta, the third-largest U.S. airline, filed last week for reorganization under Chapter 11 of the federal Bankruptcy Code, No. 1-05-bk-17923. (Bankr. S.D.N.Y.) Northwest Airlines Corp. also filed for bankruptcy last week. Delta’s filing comes after repeated warnings from Delta Chief Executive Officer Gerald Grinstein that higher fuel costs and lower demand have crippled the airline. Delta also has faced stiff competition from carriers such as AirTran Airways that have lower labor and operating costs. Delta’s case was assigned to Judge Prudence C. Beatty. Delta has been in talks with Stamford, Conn.-based GE Commercial Finance to provide the airline with $2 billion in debtor-in-possession financing, which would allow the airline to continue operating after a bankruptcy filing. Details of the loan had not been released last week, but industry analysts said they expect Delta to pledge virtually all of its remaining unencumbered assets, such as aircraft, as collateral for the loan. Pension fight coming? Bankruptcy protection will allow Delta to change the terms of its agreements with other creditors. The airline is expected to sell many assets and slash costs, the latter by renegotiating pilot salaries and perhaps cutting back its work force. Delta also could cut or even abandon its pension plan and health care benefits for retirees and employees. Such a move most likely would lead to a legal fight from employee groups. “The employees and retirees clearly want to protect whatever rights they have,” said Darryl S. Laddin, chairman of the bankruptcy and creditors’ rights practice group at Arnall Golden Gregory of Atlanta. “They’re going to want to have legal counsel to protect their interests.” While holders of common stock are likely to see their investments become worthless, rank-and-file Delta employees and retirees are also vulnerable to losses, said Dean Booth, an attorney with Schreeder, Wheeler & Flint of Atlanta who represents retired Delta pilots. Indeed, both United Airlines and US Airways Group Inc. gained judges’ approval during bankruptcy proceedings to transfer responsibility for their pensions to the federal Pension Benefit Guaranty Corp. (United filed for bankruptcy in December 2002; US Airways has filed twice in the past three years.)

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