Delta to Pare Retiree Health Benefits

Fresh off last week's victory on pension funding, Delta Air Lines now is turning its attention to paring retiree health benefits.

Delta is set to open talks this week with two retiree creditor committees on how to cut the company's cost of providing health insurance. Executives are meeting with court-appointed committees representing retired pilots today and with a similar committee representing ground employees and flight attendants Wednesday.

Late last month, Delta said it would propose to raise the portion of health care coverage that retirees pay, as part of its bankruptcy court restructuring of labor costs. The carrier said it will try to negotiate changes with the committees, but it could ultimately take the matter to the bankruptcy court.

A Delta spokeswoman confirmed the meetings with retiree committees but did not have details on the proposals.

Rob Kight, vice president of compensation, benefits and services for the airline, said Delta's benefits are among the industry's most generous.

"I think we'll be more market-competitive, but I think we will still have a very good benefit" after the changes, Kight added.

The health care talks come on the heels of Delta's successful effort to get extra time to fully fund its main pension plan, which it says should enable it to keep the main plan for ground workers and flight attendants. Congress on Friday passed a pension reform bill giving the airline 17 years to bring the plan to full funding. Delta plans to terminate its pilots' pension plan, saying it unaffordable even with extra funding time.

Delta executives say changes in retiree health benefits are fair in light of cutbacks among other work groups --- and necessary to eventually win creditor approval of its restructuring plan.

Laughlin said Delta doesn't propose to completely eliminate retirees' coverage or Delta's cost-sharing, and she indicated that some adjustments will be tied to what retirees can afford.

"We don't want this to become a one-size-fits-all approach," said Laughlin. "Our goal is to minimize the impact for those who can least afford it."

Currently, Delta retirees pay anywhere from none to all of the premiums for their health care coverage under various retirement programs, partly due to differing incentive plans the airline offered as it went through several waves of job cuts.

"I don't know at this point what they'll be asking us to negotiate," said Cathy Cone, chairwoman of the nonpilot retiree committee and head of a group representing 36,500 nonpilot retirees and dependents.

"I am happy that we will be able to sit down and negotiate," she said. "We want Delta to return to viability, but at the same time it's our responsibility, our fiduciary responsibility, to protect as much of our retirement benefits as possible."

She said a shift of the full cost of medical coverage would have a "huge impact" on many Delta nonpilot retirees who typically get a Delta pension of about $1,500 a month. Some retired couples' coverage currently costs about $900 a month, she said.

"I hope that Delta will remember ... this is a group that doesn't have a lot of money," she said.



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