Delta Airlines 2003 Annual Report Download - page 111

Table of Contents
Note 11. Employee Benefit Plans
We sponsor qualified and non-qualified defined benefit pension plans, defined contribution pension plans, healthcare plans, and disability and survivorship
plans for eligible employees and retirees, and their eligible family members. We reserve the right to modify or terminate these plans as to all participants and
beneficiaries at any time, except as restricted by the Internal Revenue Code or the Employee Retirement Income Security Act (ERISA).
Our qualified defined benefit pension plans meet or exceed ERISA's minimum funding requirements as of December 31, 2003. Our non-qualified plans are
funded primarily with current assets.
We regularly evaluate ways to better manage employee benefits and control costs. Any changes to the plans or assumptions used to estimate future benefits
could have a significant effect on the amount of the reported obligation and future annual expense.
Pension and Other Postretirement Benefit Plans
We sponsor both funded and nonfunded noncontributory defined benefit pension plans that cover substantially all of our employees. The plans generally
provide benefits based on years of service and final average salary. However, as announced in the December 2002 quarter and effective July 1, 2003, the
existing plan for employees not covered by a collective bargaining agreement (Non-contract employees) was converted to a cash balance plan with a seven
year transition period. During the transition period, eligible Non-contract employees receive the greater of the old final average salary benefit or the new cash
balance benefit. Generally, the new cash balance benefit formula provides for an annual pay credit of 6% of eligible pay plus accrued interest. Participants in
the plan on July 1, 2003, may be eligible for additional pay credits of 2% or 2.75%, depending on their age and service as of that date. Non-contract
employees hired on or after July 1, 2003 are covered by the cash balance plan only. Effective July 1, 2010, all covered employees earn the cash balance
benefit only.
We also sponsor medical plans that provide benefits to substantially all Delta retirees and their eligible dependents. Benefits are funded from our current
assets. Plan benefits are subject to copayments, deductibles and other limits as described in the plans. Non-contract employees hired on or after July 1, 2003
are not eligible for company provided postretirement medical coverage, although they may purchase coverage at full cost.
We use a September 30 measurement date for all our benefit plans. As discussed above, during the December 2002 quarter, we announced the implementation
of and migration to a cash balance pension plan, as well as changes to eligibility requirements for postretirement medical coverage for Non-contract
employees. As a result of these changes and the 2002 workforce reductions (see Note 15), we remeasured a portion of our benefit obligations on October 31,
2002.
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