Delta Reaches Deal on Retiree Health-Care Benefits

If approved by the bankruptcy court, certain retirees will, for the first time, pay a portion of the cost of their health-care coverage before reaching 65.

Delta Air Lines has reached an agreement with most of its unions to change its retiree medical benefits, according to an announcement made by Farella, Braun & Martel, the law firm representing the nonpilot-retiree committee. The changes will save the bankrupt airline about $50 million annually, according to the Associated Press.

The agreement covers a portion of roughly 42,000 pilot and nonpilot retirees, as well as their spouses and survivors, says AP. “There are no happy faces in bankruptcy court,” explains Dean Gloster, attorney for the retiree committee. “But Delta agreed to protections for the remaining retiree medical benefits that we could never have gotten in litigation.”

The deal must be approved by the Bankruptcy Court, and changes are expected to become effective on January 1, 2007. Under the agreement, certain retirees will, for the first time, pay a portion of the cost of their health-care coverage before reaching 65, notes the report. Some other retirees will go from paying 10 percent to 25 percent of the cost, while still others will go from paying 22 percent to 35 percent, adds the wire service. Nonpilot retirees who are already over 65 will qualify for a $50 monthly subsidy toward the premium for medical and prescription-drug coverage. The agreement also calls for changes to medical benefits for pilot retirees.

In addition, the deal includes provisions to reduce the hardship to individual retirees affected by the changes and will give bankruptcy claims to those whose benefits are reduced.

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