Northwest Airlines Corp. told a New York bankruptcy court on Tuesday it has reached a tentative agreement with the union representing ground workers, but talks with pilot and flight attendants unions appeared to be deadlocked.
The nation's fourth largest carrier, which filed for bankruptcy protection in September, also asked the judge overseeing the case for permission to reject labor contracts for pilots and flight attendants.
Northwest has said it needs to make cost cuts to match competitors like low-cost carriers. It also said the reductions are a step toward getting financing it needs to emerge from bankruptcy.
In announcing the agreement with the International Association of Machinists and Aerospace Workers, the attorney for Northwest said the airline was hopeful the tentative deal will be approved by the union's membership in three weeks. The union represents the airline's baggage handlers.
"I am very pleased you have reached one agreement," said Judge Allan Gropper.
Gropper said he hopes to see similar consensual agreements with other unions at Northwest, noting that litigation should not take the place of negotiations in a bankruptcy case.
Richard Seltzer, an attorney for the pilots union, warned the airline could face a strike. Northwest attorneys countered that they would ask the court to force the workers back, adding that such a strike would be violation of the Railway Labor Act. Seltzer said that union continues to work on a consensual deal and hinted that it may ask for a third party to mediate between Northwest and the pilots.
"If there's not some movement in some areas we consider vitally important, the company can expect a strike," Seltzer said.
Lee Seham, attorney for the flight attendants union, said he was concerned about how Northwest is looking to outsource jobs for its in routes to and from Asia.
Karen Schultz, a spokeswoman for the flight attendants union, told The Associated Press the outsourcing issue is a primary sticking point in its negotiations with Northwest. She said that the flight attendants union has agreed to $195 million in wage and benefit cuts and so-called productivity changes that extend hours worked by the flight attendants.
Schultz said that the hiring of non-U.S. workers for Asia flights could impact 1,800 to 2,600 jobs of its 9,000 member union.
"That's become the big issue at the table," she said of the outsourced jobs.
Daniel Kasper, who runs the transportation practice for the consulting firm LECG in Cambridge, Mass., testified on behalf of Northwest that competition from low-cost carriers has eroded the airline's profits amid an industrywide downturn.
"The U.S. airline industry has just ... gone through the worst period in its history," said Kasper, who served at the United States Civil Aeronautics Board as Director of International Aviation. Without cost cuts, he said, the "prospects for emerging from bankruptcy are quite dim" for Northwest.
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NWA told a bankruptcy court it has reached a tentative agreement with the union representing ground workers, but talks with pilot and flight attendants unions appeared to be deadlocked.
The pilots' share amounts to 13 percent of all the unsecured claims, and will be paid in shares in the reorganized company.