Maybe bankruptcy Judge Allan Gropper will settle the feuding between Northwest Airlines and its three biggest unions, which represent about 30,000 workers. Maybe he'll inflame it.
We'll soon see, as the Northwest saga reaches another critical chapter. On Tuesday, the Eagan, Minn.-based airline and the unions for its pilots and flight attendants are scheduled to square off before Gropper to argue about what kind of labor deals Northwest needs to survive.
The union for about 15,000 baggage handlers, reservation agents and other Northwest ground workers is scheduled to appear in court in New York, too. But around midnight Friday, that union, the International Association of Machinists, announced a tentative deal with Northwest.
The airline and union will ask Gropper to postpone the hearing on the IAM contract. The union hopes to quickly put the settlement to a vote. It still was being tweaked Saturday.
The airline's pilots, flight attendants and ground workers have insisted Northwest is trying to squeeze them for wage and other givebacks that are far greater than what it needs.
Gropper could impose sweeping new labor contracts on Northwest and the unions. Or he could drive them to settle the issues themselves with the threat of imposing deals that might displease one or both sides. He may have already done that in the case of the IAM and Northwest.
Talks between Northwest and the two other unions were continuing over the weekend. With increasing passion, the unions have threatened to strike if Northwest doesn't back off its demands. They vow they'd walk off their jobs even if it could kill the airline, which still employs more than 12,000 Minnesotans and dominates Twin Cities air travel.
Pilot union leader Mark McClain has repeatedly said Northwest could provoke a "murder-suicide" confrontation.
"We're willing to reach a consensual agreement that satisfies Northwest's need to be competitive," McClain said. "But Northwest is trying to bust the union.... They're trying to undo decades of collective bargaining."
Northwest has indicated it recently has been losing about $8 million a day and will die if it doesn't lower its labor costs dramatically.
The airline has leaned on its unions for years for big-time givebacks, as it racked up billions of dollars in losses. It finally fell into bankruptcy in September.
"Time has now run out," Northwest says in a filing asking Gropper to undo union contracts to help slash annual labor costs by $1.4 billion, roughly one-third. "Northwest must achieve competitive labor costs quickly, or it... faces the prospect of failure."
For this story, Northwest declined to comment further on the hearing. Each side will deploy a platoon of attorneys and industry analysts and experts to make its case during the court proceeding, which some expect could take up to eight days.
By mid-February, Gropper probably will rule on the contracts -- if he hasn't already cajoled Northwest and the unions into reaching settlements on their own.
The unions' strike talk might be just chest-thumping. Or not. Reason doesn't always rule in the often-bitter relations between Northwest and its unions.
Witness the ongoing mechanics strike at Northwest. It has cost thousands of employees their jobs, as the airline replaced them or sent their work to outside contractors.
To be sure, the current strike threats are intended to influence how much the judge gives Northwest in any imposed settlement.
Gropper will consider the risk of imposing contracts that could provoke a strike by one or more of the unions, said Anthony Sabino, a professor of law at the Tobin College of Business at St. John's University in New York.
"If the airline isn't flying, what have you achieved?" he said. Yet the strike card is the only real leverage the unions have against Northwest, said John Remington, a professor of industrial relations at the University of Minnesota. Northwest probably will be looking to borrow big money when preparing to exit bankruptcy. United Airlines -- which is expected to exit bankruptcy next month -- is looking for $3 billion. Lenders won't look favorably on Northwest if it doesn't have labor peace.
"A lengthy strike by the pilots -- probably anything over 30 days -- would be a disaster," Remington said. "I don't think the pilots would strike with the intention of putting Northwest out of business. Miscalculation. That's the problem."
To convince Gropper to undo union contracts, Northwest must convince him that the move is necessary for its survival and positions it to reorganize, Sabino said.
With imposed contracts, Gropper would be inclined to give Northwest a "fighting chance" to succeed but he'd consider the needs of the airline's employees, too, Sabino said.
"He won't give Northwest everything it wants or the unions everything they want," he said. "He'll give Northwest what he decides is just enough to get by, with the least harm to the unions."
But there's no how-to guide for Gropper to follow in rewriting Northwest's labor contracts, Sabino said. There are no recent precedents for undoing an airline union contract and imposing new terms on workers.
"He'll tell these guys, 'You're much better off rewriting these contracts yourself; I could make both of you unhappy.' " Sabino said. "He will only make a decision as an absolute last resort."
Sabino forecasts a repeat of the confrontations United and US Airways had with their unions in bankruptcy. That means last-minute deals as unions grumble about grounding the airline.
The unions are especially peeved about Northwest's proposal to create a subsidiary airline and outsource jobs. The unions figure about a quarter -- or more -- of Northwest's 34,000 remaining jobs could be lost.
As far as its labor costs go, Northwest argues they're now the highest in the industry and they must come way down for the airline to compete with peers that have slashed wages and with low-fare carriers that have long enjoyed far lower labor costs.
But the flight attendants union charges that Northwest is trying to leapfrog over United and other key competitors by using its bankruptcy reorganization to extract excessive pay cuts.
Northwest's outsourcing proposal would reduce flight attendant ranks by more than half, the union claims. That would work out to about 4,500 jobs.
"Indeed, there is little economic downside for the flight attendant group with respect to initiating a strike," the union said in a recent court filing.
Neither Northwest nor the IAM was offering any details about their tentative settlement.
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