NWA, Unions Clash in Court

Jan. 19, 2006
Northwest Airlines pilots are earning 39 percent less than they were paid two years ago, yet today the airline's management will ask a bankruptcy judge to throw out the pilots' contract.

Northwest Airlines pilots are earning 39 percent less than they were paid two years ago, yet today the airline's management will ask a bankruptcy judge to throw out the pilots' contract.

The airline also faces a court showdown with its flight attendants over similar issues of lower pay and the handing over of longtime union jobs to outside workers.

U.S. Bankruptcy Judge Allan Gropper has the power to abrogate the contract of about 5,700 pilots within 30 days. He also could toss out the contract that covers almost 10,000 flight attendants represented by the Professional Flight Attendants Association (PFAA).

However, on the eve of today's bankruptcy labor trial, Northwest publicly acknowledged that it has moved off of some of the proposals the unions find most objectionable.

Under a new company proposal, Northwest pilots would retain the ability to fly airplanes with 77 to 100 seats, according to a company bankruptcy filing. Northwest had pushed to shift that flying to a new company, and the pilots threatened to strike over that loss of jobs.

Late Monday night, the pilots union told its members that the union and management "remain far apart on [flying] scope and many other major contract items."

Negotiators said Northwest is still pressing "to outsource flying on an unlimited number of 76-seat and smaller aircraft."

The union emphasized that it continues to offer "to fly 51- to 100-seat aircraft at competitive costs and can find no economic justification for non-Northwest pilots to fly such aircraft."

In addition, Northwest has rolled back its demands to the flight attendants union.

"Northwest had preferred to maintain its 75 percent proposal with respect to using foreign flight attendants to staff a portion of its international flights because Northwest's proposal provides better economics, better customer service and smaller pay cuts for flight attendants," the airline said. "Northwest offered to move the ratio to a 50-50 mix of foreign and domestic flight attendants on international flights."

Northwest is pursuing a two-pronged strategy, with talks continuing with the unions even as the airline's lawyers argue the old contracts should be thrown out.

"We would prefer a result that is negotiated, rather than imposed," Northwest CEO Doug Steenland said in a Thursday message to employees.

The outcome of the negotiations and court trial could make the next few weeks pivotal in deciding the airline's future. These actions constitute the final chapter of Northwest's three-year campaign to win concessions from its unionized workers.

Northwest wants to quickly reach its goal of cutting labor costs by $1.4 billion a year. In December, management and salaried employees took their second wave of pay and benefit cuts, which are expected to save the airline $71 million annually.

Northwest argues that it is running out of time to reduce its labor costs, the highest in the industry before temporary pay cuts took effect in November for most union workers.

$4 billion lost since 2001

Northwest has lost more than $4 billion since 2001, and its cash balance has dropped to $1.24 billion, the airline said Friday in a bankruptcy filing.

The unions, having already made significant concessions, aren't signing up for more without a fight.

In particular, leaders of the Northwest branch of the Air Line Pilots Association (ALPA) have drawn on battle-tested lawyers and financial experts to attack Northwest's justification to shift some of its flying to a new company.

Mark McClain, chairman of Northwest ALPA, said recently that pilots will not allow Northwest's bankruptcy to become an excuse to eliminate Northwest jobs when the operation of 77- to 100-seat jets can be done cost-effectively by Northwest pilots.

The flight attendants and the pilots are arguing in court filings that Northwest has moved the goal posts on what kind of labor savings are needed.

Before Northwest's September bankruptcy filing, the PFAA said, "Northwest characterized United Airlines as its primary competitor and stated that its goal was to have a United-like cost structure."

Now, Northwest is seeking compensation rates lower than what's paid at United, and flight attendant leaders are battling with Northwest over its proposal to replace American flight attendants with foreign nationals.

Northwest counters that the union "simply overlooks the reality that PFAA's members do not provide the language skills that Northwest requires." The airline said that 60 percent of Northwest's Pacific passengers originate from Asia, yet fewer than 5 percent of Northwest's flight attendants speak any Asian language.

Besides the threat of losing more than 2,600 jobs, the flight attendants have been focused on what they contend is unfair bargaining by Northwest in refusing to budge from a $195 million target for wage concessions from that group.

"For the PFAA, it is analogous to having been instructed to commit suicide, but cordially being given the option of how to do so," the PFAA's lawyers said in a court brief.

Industry exception?

Duane Woerth, president of ALPA International, said that United and US Airways executives reached consensual agreements with their labor unions while their carriers were in bankruptcy and that Northwest risks becoming the industry leader in the wrong category - poor labor relations.

"Nobody has an imposed contract," Woerth said. "It's time for Northwest to come off of the brink" and offer terms the pilots can ratify.

"Do they really want to be the airline that can't make a deal [with its workers]?" he asked in a recent interview.

Leaders of the International Association of Machinists and Aerospace Workers (IAM) said Saturday that it will submit a Northwest contract proposal to the membership for a ratification vote in the next few weeks.

Liz Fedor - 612-673-7709

BY THE NUMBERS

Since 2001, Northwest has lost more than: $4 billion

Current cash balance: $1.24 billion

Labor savings target: $1.4 billion

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