Much Happened in 2005 at Memphis, Tenn., Airport

Dec. 29--Memphis International Airport was the stage for some of the most compelling human dramas in town this year.

FedEx Corp. and its pilots went back and forth all year, including public feuding over the company's offer to give its 4,300 pilots more than $500 million in signing bonuses and raises if they would agree to work under the contract signed in 1999.

The offer passed without a vote from the pilots.

The sides entered federal mediation this fall over a contract that's been amendable since May 2004.

Meanwhile, dozens of Northwest Airlines mechanics made their last stand at the airport in a late-summer strike they said would shut the airline down.

It didn't. But within a month, Northwest and Delta Air Lines filed for bankruptcy protection, putting fully 90 percent of the city's airline service in jeopardy and costing the Memphis-Shelby Airport Authority nearly $3 million in lost revenue.

"I imagine we won't see any of that money before they enter their reorganization plans, which could be 18 months," said Larry Cox, the authority's president and chief executive. "If they reject their leases, we would probably get a few pennies on the dollar. We'd be an unsecured creditor like everyone else."

The airlines' leases here come due in mid-2007. The authority has about a $4.5 million surplus, including the losses scheduled to be written off early in 2006.

In the meantime, there's a hiring freeze at the airport and the authority is cutting back on nonessential services, including equipment purchases and "things you do every year to stay ahead of the wolf," Cox said.

"The loss of revenue will be rolled into next year's budget; landing fees and terminal fees will go up. Whoever is here will pay."

While there was plenty of good news at the airport, including record profits for Memphis-based FedEx Corp., the start of the $200 million new base for the Tennessee Air National Guard, creating 500 to 600 construction jobs in 2006, and completion of the $27 million addition to taxiway Yankee and the opening of the $25 million remodel of the airport's concessions, the depth of Northwest's troubles set off a chain of events that affected thousands of Memphis employees and travelers, including partner and unsecured creditor Pinnacle Airlines, which so far has avoided bankruptcy.

Mesaba Airlines, Northwest's other Airlink partner, filed for bankruptcy in mid-October.

"NWA owes us between $53 and $54 million for the service in September," said Phil Reed, vice president of marketing for Memphis-based Pinnacle. "In bankruptcy, it's purely speculative what percentage of funds you will retain."

In late October, Northwest grounded 15 of Pinnacle's 139 planes, reducing its earning power by 11 percent.

Pinnacle regrouped, accepting about 60 voluntary layoffs and laying off about a dozen more workers.

The other shoe fell in November when Northwest invited other carriers to bid on Pinnacle's work.

"We haven't heard anything yet, but we believe strongly in Pinnacle's value to the Northwest system," Reed said.

Pinnacle flies as an Airlink partner for Northwest -- its sole customer -- feeding passengers into Northwest's hub cities and flying direct routes to smaller cities.

If another carrier can do the work for less, Pinnacle presumably will be out of business, a long fall from 2004 when it was the fastest growing airline in the country.

It has 3,400 employees; about a third are based in Memphis.

"These are not kinder, gentler times," said Darryl Jenkins, professor at Embry-Riddle Aeronautical University. "One way or another, Northwest is going to drive its costs down, and some people are going to get run over in the process."

Sam Ellis, president of the local International Association of Machinists and Aerospace Workers, which represents Northwest's ticket agents, clerical workers and baggage handlers, is home on sick leave, earning 44 percent less, he said, since Nov. 16 when the Northwest bankruptcy judge imposed temporary 19 percent pay cuts for IAM workers and an accompanying 25 percent cut in sick leave benefits.

"People are depressed and losing hope," Ellis said. "Anybody who can retire is retiring and leaving Northwest."

Other unions had agreed to temporary cuts, including Northwest's pilots, who took 24 percent cut in November on top of a 15 percent cut they agreed to in late 2004.

The IAM refused, saying its members not only couldn't afford cuts but had never been repaid as promised for concessions they made in the 1990s.

Senior baggage handlers earning about $42,000 a year lost nearly $8,000 in earning power overnight.

While its flight schedule is little changed in Memphis, Northwest has scaled back its employee base significantly.

It no longer does any maintenance in Memphis, reducing its maintenance workforce by 110 people over several years.

Maintenance is contracted to Swissport, which has a Memphis office.

Fueling and ground vehicle maintenance is done by Air Service International Group. A local branch of GAT Airline Ground Support is cleaning the planes.

Companywide, Northwest has replaced all 4,400 of its striking mechanics, plane cleaners and maintenance workers. At least 280 strikers and another 200 laid-off union members crossed the picket line. None of the airline's other six unions honored the picket line.

Strike members are voting on a final contract now, which is essentially their final send-off.

If approved, the strikers will receive four weeks of severance pay, down from the 16 weeks Northwest considered offering when the sides met in September.

Union officials urged the rank and file to reject the contract. The vote will be public Friday.