NWA Three Major Unions Seek Deals

With the threat of court-imposed contracts looming, bankrupt Northwest Airlines' three major unions are looking to quickly give the airline most of the labor savings it wants. With that down payment, they hope to get until mid-February to work out deals that satisfy the airline's quest for $1.4 billion in total annual labor savings.

If it gets the savings, Northwest has signaled it will push back a Nov. 16 hearing at which it is slated to ask a bankruptcy judge to impose new contracts on its unions.

The unions worry that such court-imposed deals could be far more unpalatable than anything they could bargain for with Northwest.

"Everyone understands the concept of doing an interim agreement," said pilots union spokesman Hal Myers. "It all depends on what is required to achieve it."

With the pilots, Myers indicated an interim deal would require approval of the union's master executive council and rank-and-file members.

Northwest insists it must have deals with all three major unions — representing the airline's pilots, flight attendants and ground workers — for the interim solution to work, union sources say.

Unions still are trying to work out details of how they would give Northwest the near-term savings it wants. The effort could fail, to be sure.

To hit Northwest's interim target, pilots would have to come up with $217 million in annual givebacks. That's 60 percent of the $362 million Northwest still eventually wants from them. Pilots have already given Northwest $250 million in annual wage and other concessions.

"We're figuring out what would be acceptable to reach that number (the 60 percent)," said Myers.

Northwest's total giveback target for pilots is $612 million, including previous "contributions."

Flight attendants would have to provide $117 million in concessions now and another $78 million down the road to reach Northwest's total savings target. Ground workers, such as baggage handlers and reservation agents, would be asked for cuts of $114 million now and $76 million later.

The flight attendants seem to be very close nailing down an interim agreement with Northwest. Wage cuts of 20 to 25 percent would provide most of the labor savings.

Flight attendants don't want a judge imposing a contract on them, said union spokesman Peter Fiske.

"This buys us additional time and keeps us in control of own future,'' he said. "We are hopeful of having this worked out in the next week or so."

Eagan-based Northwest, which filed for bankruptcy in September, has been trying to extract big-time wage and other givebacks from its unions for nearly three years. It's about $900 million short of its $1.4 billion goal.

After its mechanics and cleaners struck in August, Northwest imposed a contract on them. That contract, and Northwest's outsourcing of most strikers' jobs, will save the carrier about $203 million a year.

Managers and salaried employees have taken about $71 million in wage and other cuts. And then there's the $250 million from pilots.

Northwest, which has lost over $3 billion on its operations since the start of 2001, complains it has the highest labor costs in the industry.

Its labor costs work out to 4.31 cents for every seat-mile it flies, Northwest says. In bankruptcy court filings, Northwest has warned that its survival is at stake because its labor costs are not competitive. But if it gets $1.4 billion in labor cuts, that measure would fall to 2.6 cents, putting Northwest in the middle of the labor-cost range among U.S. airlines.

"If Northwest's labor costs cannot be brought in line, it will only be a matter of time before Northwest can no longer function as a going concern," it said in one filing.

Martin J. Moylan covers airlines and can be reached at [email protected] or 651-228-5479.

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