Delphi seeks to end health benefits for retirees
Bankruptcy
Troubled auto parts supplier Delphi Corp. has asked a bankruptcy judge to allow it to cancel health care and life insurance benefits for current and future salaried retirees, citing the steep downturn in the overall auto industry in recent months.
The request filed Wednesday with U.S. Bankruptcy Court in New York seeks to cut those benefits to 15,000 salaried retirees as soon as April 1. The Troy, Mich.-based company said the moves would save about $70 million annually, or $200 million through 2011.
Cutting the benefits also would allow Delphi to reduce its balance sheet liabilities by $1.1 billion, the company said.
Delphi said in the filing that its plan to emerge from bankruptcy protection had been based on assumptions of industrywide light vehicle production of 14.2 million units in 2009 and up to 16.3 million units in 2011.
The forecast also included expectations that General Motors Corp., the supplier's former parent and still largest customer, would build at least 3.15 million light vehicles in 2009 and up to 3.61 million in 2011.
But the overall industry took a turn for the worse in the fourth-quarter of 2008 and the U.S. based automakers now say that the best the industry will be able to do this year will be about 12 million to 12.5 million units, Delphi said in its filing.
Delphi has been operating under Chapter 11 protection since October 2005. A hearing on the request is set for Feb. 24.
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