Usually, nothing too crazy happens in Peachtree City, Ga., a pristine little hamlet 35 miles south of Atlanta. Its 36,000 residents cruise around 80 miles of paved paths in their 11,788 town-registered golf carts. Three golf courses, two lakes, and a sprinkling of quaint shopping centers make life in this town a suburban idyll. Peachtree City was ranked the eighth-best place to live in America last month in a CNN/Money magazine survey. It boasts the state's No. 1 school system and almost no crime. The front-page news last week: An unruly woman tried to hex patrons of a nearby International House of Pancakes (IHP ) before being arrested.
Behind the placid facade, however, Peachtree City is on edge. Its once-richest patron, Delta Air Lines Inc. (DAL ), which employs 3,530 people in Peachtree City, is sliding toward bankruptcy after $10 billion in losses over the past four years. The city's residents are, almost to a person, preparing for pain. When workers' families are taken into account, about 40% of Peachtree's citizens depend directly on Delta. Already, the "Deltoids," as they are called in town, are taking up second jobs, rethinking long-established retirement plans, encouraging their spouses to go back to work, and in some cases quitting the airline business forever. "If Delta went under, it would be a big ripple," says Mayor Stephen D. Brown.
Peachtree City, in short, is the closest thing in the airline industry to a company town. First carved out of 12,000 acres of pine forest and scrub brush in 1959, the once-remote outpost became a haven for flyboys and their families by the 1970s because of its proximity to Atlanta's Hartsfield-Jackson International Airport. That influx of highly paid pilots and union workers permeated the local economy. The average household income in Peachtree City tops $97,000, according to the Fayette County Development Authority -- nearly double the national average. At a median price of $227,000, the town's homes, mostly manicured mansions and tidy bungalows, are worth 36% more than those in Atlanta.
Residents of Peachtree City have enjoyed more than just good salaries. A career at Delta also promised adventure, a secure retirement, and lots of free time. Most pilots, for instance, work less than 20 days a month. "The toll [of bankruptcy] will be more emotional than financial," says Bruce Thoman, a retired Delta pilot who has lived in Peachtree City for 31 years. "This was Mother Delta -- we had great benefits, great pay. We did well."
Now the jet engine that for so long made this place hum is conking out. Consider Delta pilot John Matwick. A 15-year veteran, he flies Boeing (BA ) 737-800 planes. At 50, he's eligible for early retirement, for which he could get 50% of his pension in a cash payment. On Aug. 1, 145 other nervous pilots jumped at the payout -- one reason Delta's $1.7 billion in cash is dwindling fast. In all, some 565 have bailed out since the beginning of the year. But Matwick can't afford it. The financial penalty for cashing out 10 years early would be huge, he says -- too much for a guy with twin daughters who just graduated from the University of Notre Dame, where tuition runs $31,450 a year.
Still, sticking it out at Delta is scary, too; if Delta were to terminate its pension plan and hand it over to the government-backed Pension Benefit Guarantee Corp., Matwick would take in a measly $26,000 a year. His solution, for now, is to give up some leisure hours to moonlight, selling adhesives to high-end woodworking outfits. "It's real depressing," says Matwick. "Nobody has a good thing to say about anything."
Charles M. Pinkston, who joined Delta at age 30 fresh out of the U.S. Air Force, faces a different dilemma. A more senior pilot than Matwick, he is loyal to Delta and is staying with the company -- at huge personal risk. The 57-year-old Pinkston is eligible to retire now with a big cash payout. In fact, so many pilots of his generation have retired in the past year that Pinkston has jumped from No. 900 on Delta's seniority list to 72, a plum spot because he can practically set his own flight schedule. The reason for the exodus: Pilots want to cash out while Delta can still afford its pension obligations.
Nonetheless, Pinkston, looking tanned and rested in golf shorts and running shoes on an idle Thursday afternoon, says he'll wait until yearend before retiring. He trusts Delta Chief Executive Gerald Grinstein's pledge to avoid bankruptcy at all cost -- and Pinkston will get more money the longer he waits. "We've worked for an honest company," he says. "We don't expect them to stick the knife in and [kill the] pension right away."
Certainly, the once-plush lifestyles of many Delta workers have changed, probably forever. Some pilots are downsizing from big homes to townhouses. Others are leaving the field altogether. Bruce Thoman's son Bret, 33, has traded in his wings for a career in real estate. In January he quit his job as a pilot for ASA, Delta's recently sold regional-airline subsidiary. After two years at ASA, he was making only $29,000 a year, not enough to support his wife and baby daughter. The old pilot lifestyle of flying a couple weeks a month and making big cash is gone. Now, "people are asking: 'What did I get myself into?"' says the younger Thoman, who will make close to $60,000 this year selling houses.
Delta's troubles are reverberating throughout the community. At Plumyumi Day Spa & Boutique, where the six-part fruit peel costs $435, owner Lori Denney has seen business dip as much as 10% in the last month "since they really started talking about bankruptcy." The women of Peachtree City, it seems, are cutting back on their beauty regimes. Denney herself took a buyout from Delta, where she was a reservations manager, after the 2001 terrorist attacks.
At Partners II Pizza, a Peachtree City institution for 28 years, owner Marilyn Royal is anxious despite a sizable line for the Friday $4.75 pizza-and-salad buffet. Sales had risen every month for 12 years straight -- until January, she says. That's when Delta pilots gave up $1 billion in wage concessions. Since then sales are down about 5%. Royal worries that if Delta files for bankruptcy, she may have to start cutting back staff hours. "It's scary," she says. "[Delta families] were eating out three or four times per week; now they're doing it one or two."
"AN AMERICAN PROTOTOPIA"
Despite the stress in his community, Mayor Brown is unruffled. When Eastern Air Lines shut down in 1991, he recalls, "it sent a shockwave through the city." Home foreclosures rose, and many people moved away. This time around the city is better prepared for whatever happens to Delta. Brown points to a study released this summer by Dr. Ruth Conroy Dalton, a professor at University College London, which dubs Peachtree City "An American Prototopia" because its cart paths prevent sprawl and promote healthy living.
With a typical Southern charm that belies their jitters, local officials say they're confident Peachtree City will get past Delta's potential demise -- if only because Atlanta's airport, the world's busiest, is a heavy-duty magnet for any airline eager for a big hub. Brian R. Cardoza, chief executive of the Fayette County Development Authority, observes: "As they say, you can't get to hell without going through Atlanta."
By Brian Grow in Peachtree City, Ga.