Delta and Northwest estimate the corporate wedding will save $1 billion through sharing resources, while simultaneously expanding service with more direct international flights to their combined 176 million customers. But Delta’s nonpilot employees, from baggage handlers to flight attendants, worry about where the cost savings really will come from. For decades, Delta’s nonpilot employees never unionized or formalized benefit plans with employers. Now, they may be regretting it, especially when it comes to retirees’ health benefits. “There is no bottom,” says Cathy Cone, founder of Delta Air Lines Retirement Committee (DALRC). “Now, they could give us a Band-Aid for health care if they wanted.”
Delta’s employees traditionally enjoyed substantial benefits without a union. “The reason we had the trust and didn’t need a contract was because Delta always provided us with better paying benefits and used industry standards,” Cone says. But now, “they’ve thrown those standards out the door.”
The arrangement worked out until 2002, Cone says, when Delta started paring down the special treatment: scrapping its over-65 retirement program and raising premium costs. “Today, if you are a retiree and did not retire under an early-out program you pay $540 per month for your premium alone,” Cone says. “That same premium in 2002 was $210 with the deductibles. Delta retirees worked for decades to earn these health-care benefits that have been stripped away and today, retirees face the risk of losing their health care all together.”
Cone, who has worked for Delta for 35 years, including more than 20 years as a flight attendant, believes the merge itself was motivated by executive profit rather than rising fuel costs. “A merger won’t reduce the cost of fuel. This is not about fuel; this is about greed,” Cone says.
Delta spokesman Anthony Black believes the reaction from Cone is unwarranted—especially since it was her DALRC that helped set up Delta’s historic nonunion benefits. “It’s a little bit odd, now the same group is saying, ‘Oh, because we don’t have a contract now, things are going to change,’” Black says. “Even though, on multiple levels, they’re better than their counterparts [at other airlines].”
“Right now, they have a policy manual subject to change at the whim of the company,” says Kevin Griffin, president of the Northwest Airlines Flight Attendant Association. A company guaranteeing employee benefits on just a handshake isn’t reassuring, Griffin says. “They need to secure their future with something written down that is legally binding.”
Black, however, contends the flexibility the company has by working around unions is still worth it, citing a recent generous retirement package that offers free lifetime standby flights for employees. “We had over 3,000 sign up for the program,” Black says. “You can’t negotiate a deal like that with unions.”
Cone says it was this same generous program that recently hindered employee-lobbying efforts, as the retirees who took early retirement are now unable to unionize.
“They offered me and thousands of other retirees an early-out package that included no cost for my insurance premium, deductibles, co-pays or out of pockets and shortly after we signed on the dotted line, the deductibles, co-pays and out of pockets increased dramatically,” Cone says.
“The majority of Delta retirees live on a pension of less than $1,670 a month and, for two people, paying $1,080 for their insurance premium alone,” Cone says, citing lower premiums at carriers like Northwest paying $18 to $180 for two people per month.
Black still points out that Delta and Northwest have gone the extra mile to safeguard pensions. The Pension Protection Act of 2006, he says, allowed Delta and Northwest to better guarantee pension payments for employees by stretching them out over a longer period of time.
But, with unions and contracts backing up everyone in the deal except for Delta’s tens of thousands of nonpilot employees, Cone remains doubtful. “We have a difficult time trusting what Delta has to say because Delta’s good intentions have become broken promises.”