A federal bankruptcy judge delayed ruling on requests by Northwest Airlines flight attendants to reduce the severity of company-imposed pay cuts and to be paid a claim of more than $1.1 billion.
The Association of Flight Attendants argued that its more than 8,000 members were owed a claim that consists of $1.08 billion for five years of future wages and benefits lost when the company rejected its contract in July, another $83.25 million interim wages lost since the rejection, $30.6 million from individual grievances and unspecified damages for pension contributions.
The company said AFA had no right to their claim.
Judge Allan Gropper had to weigh the issue of whether the rejection of the contract violated non-bankruptcy labor laws, and therefore gave the flight attendants the right to assert their claim.
Lawyers for Northwest Airlines Corp. said the claims are "too speculative to be allowed," and because Gropper had granted permission to reject the collective bargaining agreement, other labor laws do not apply.
AFA lawyers said the contract rejection was essentially a breach of contract, which would give the claim credence under non-bankruptcy laws.
Egan, Minn.-based Northwest imposed lower wages on flight attendants in July, dropping the average salary to $26,000 from $33,000, a 21 percent reduction, according to the AFA. Some time-off rules were also changed. The cuts were designed to save the company $195 million annually as part of an overall plan to save $1.4 billion.
The flight attendants union had proposed cuts worth $156 million a year.
Gropper delayed ruling on the pay cuts on March 8 so he could consider the issues simultaneously. He said Wednesday that he would rule on the two motions as soon as he could.
Northwest is scheduled to be back in court on Monday to seek court approval to begin soliciting votes on its reorganization plan.
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Under Gropper's ruling, "the flight attendants won't have any claim" unless they reach a new deal by the end of the bankruptcy.
In a bankruptcy court motion filed Monday, flight attendants argued that Northwest's business plan, drafted in late 2005, proved overly pessimistic.
The union wants Northwest to trim concessions to $156 million because the airline is doing better than it projected.
Before the plans are implemented, flight attendants must approve the deal.