A group of Delta Air Lines' retired pilots headed by a former union chairman is objecting to health care cost cuts that the airline says will save it about $50 million annually.
U.S. Bankruptcy Judge Adlai Hardin is set to hear Delta's case today in New York for the planned overhaul of retirees' health benefits, which would result in steeper premiums and other changes for roughly 42,000 retirees.
In an objection filed last week, former pilots union Chairman Will Buergey said the jump in premiums, coming on top of Delta's planned terminations of the pilots' pension plan, is "unduly harsh" and unfairly targets retired pilots.
Delta recently stopped sending monthly pension checks to about 1,300 retired pilots as a result of the pending termination, also being appealed by Buergey's group.
"Despite these financial hardships, the very same retired pilots with no expectancy of monthly benefits are being asked to contribute increased health care premiums," Buergey's attorney said in the filing.
The group could have a difficult time blocking the proposed changes, which are part of a settlement reached with a court-appointed committee representing retired and disabled pilots, and a similar committee for retired flight attendants and ground employees.
Delta said it needs cost reductions in all areas as part of its plan to emerge from bankruptcy.
Delta has already cut thousands of jobs, chopped pay and frozen pensions as part of its goal to reduce labor costs by about $930 million annually.
"Despite the fragility of its business position, Delta's retiree health care costs are currently among the highest [and its retiree benefits programs are among the most generous] in the entire airline industry," said Delta in a court filing, although it apparently didn't provide cost comparisons.
A court-appointed committee representing Delta's unsecured creditors supported Delta's move, saying the planned cost cuts will put Delta retirees' benefits "in the middle of the pack" among big network carriers.
The changes, which could reduce Delta's average cost per retiree by roughly $1,200 a year, will take effect Jan. 1 if approved by the bankruptcy court.
Copyright 2005 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.
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