This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx United and Delta Increase Pressure on Employees for Concessions January 15, 2004 By MICHELINE MAYNARD Two troubled airlines stepped up their efforts yesterday to persuade their unions to grant contract concessions aimed at helping the companies cut costs. United Airlines said yesterday that it might ask a federal bankruptcy judge for permission to reduce the health care benefits of its 35,000 retirees. The airline said it hoped to reach agreements with its unions without asking a court to impose the cuts, a step other bankrupt companies, notably those in the steel industry, have taken. United has reapplied for $1.6 billion in federal loan guarantees, which would provide the centerpiece of its restructuring plan. Its first application was rejected in December 2002, sending the airline into Chapter 11 bankruptcy. Meanwhile, the chief executive at Delta Air Lines, Gerald Grinstein, pressed the union's 8,500 pilots to grant wage and benefit cuts, but the pilots' union said it might put off negotiations until closer to the time when its contract expires next year. Mr. Grinstein's comments came after Delta reported a narrower fourth-quarter loss compared with 2003, but saw its debt downgraded further into junk territory. Both actions came as the airline industry is hoping for a rebound in traffic this year that would end a slump that began in 2000. United said it wanted retirees to pay more of the cost of their health care. "This change will bring the medical benefits provided to current retirees more in line" with those provided at other companies and those that will be provided to future United retirees, said Peter D. McDonald, United's executive vice president for operations, in a statement. United's position is shared by several large corporations. The nation's biggest companies and their retirees spent $20.6 billion for health benefits in 2003, a 13.7 percent increase from $18.1 billion in 2002, according to survey results announced yesterday by the Kaiser Family Foundation and Hewitt Associates, a benefits consulting firm. Forty, or almost 10 percent, of the 408 large employers surveyed said they decided last year to eliminate subsidized health benefits for future retirees, and 71 percent raised the share of premiums paid by current retirees who are still covered. More than 8 in 10 said they would increase retiree contributions within three years. The survey, conducted last summer before Congress approved expanded Medicare benefits, included companies with 1,000 or more workers. The suggestion that United might file a motion seeking to reduce benefits came about eight months after the airline, a unit of the UAL Corporation, won $2.56 billion in annual labor cost reductions from its unions. United's flight attendants were particularly upset by the move. In a statement yesterday, their union said 2,500 flight attendants had agreed to retire early, in return for the airline's pledge to protect their benefits. Instead, said the union, the flight attendants now face the prospect of losing those benefits as a result of trying to help the airline. Over the years, a variety of companies have filed or considered filing requests with bankruptcy courts to reduce or eliminate retirees' benefits. They include Kaiser Aluminum, Polaroid, Federated Department Stores, and particularly, a host of steel companies, including Kaiser, National and Bethlehem Steel. US Airways, which did not ask a court to reduce retirees' benefits when it emerged from bankruptcy last year, is now seeking to cut an additional $200 million to $300 million in costs. It says it may sell major assets like its East Coast shuttle or one of its three hubs to raise the money. At Delta, company executives said they were disappointed by the fourth-quarter results. The airline lost $327 million in the quarter. Though that was better than the $363 million loss in the year-earlier quarter, analysts said the performance could be the worst among major airlines for the period. For 2003, Delta lost $773 million, the first time in three years that its loss was less than $1 billion. But Delta forecast a loss for the first quarter. The airline's continued losses prompted Standard & Poor's Ratings Services to cut Delta's rating to B-plus from BB-minus. The agency kept Delta on CreditWatch with negative implications, meaning its rating could be cut again. Milt Freudenheim contributed reporting for this article. http://www.nytimes.com/2004/01/15/business/15air.html?ex=1075179177&ei=1&en=cee2b30b7db3195d --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! 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