Northwest Has Spent Nearly $1 Million in Lobbying This Year

NWA, which faces a strike by its mechanics as early as Saturday, says it needs both labor concessions and pension relief to avoid bankruptcy.


WASHINGTON (AP) -- Northwest Airlines spent $976,000 in lobbying expenses in the first six months of 2005 as the Eagan, Minn.-based carrier pushed for pension relief legislation to help it stay out of bankruptcy.

NWA, which faces a strike by its mechanics as early as Saturday, says it needs both labor concessions and pension relief to avoid bankruptcy.

The airline listed the pension relief bill along with a host of other pieces of legislation on its most recent lobbying report. The reports do not break down how much money it spent on each bill, and Northwest declined to provide that information.

NWA and Delta Air Lines, both of which have underfunded pension plans, have lobbied for changes in law that would allow them to spread out pension payments over a longer time. That would help them avoid bankruptcy by saving cash.

They are backing legislation by Sens. Johnny Isakson, R-Ga., and Jay Rockefeller, D-W.Va., that would let companies fund the pension plans over 25 years. Last month, the Senate Finance Committee passed a pension relief bill that called for a 14-year timetable.

The legislation, NWA spokesman Kurt Ebenhoch said, ''will allow us to meet our pension obligations to our employees, protect taxpayers and achieve pension costs that are more competitive with those of other airlines, particularly low-cost carriers.''

Sen. Norm Coleman, R-Minn., is co-sponsoring the bill.

''This is smart reform that will protect and grow jobs, while significantly decreasing the likelihood airlines such as Northwest will have to transfer their pension liability to the PBGC,'' Coleman said, referring to the Pension Benefit Guaranty Corp.

Vaughn Cordle, CEO and chief financial analyst with AirlineForecasts in Washington, said pension relief would help NWA avoid huge payments in the next few years.

''Northwest Airlines can avoid bankruptcy if they get pension relief, if they can restructure their debt, and if they get labor concessions,'' said Cordle, who is also a pilot. ''If management does not think it can get those three, or a couple of those, it would be prudent for them to file bankruptcy.''

Mark Streeter, an airline credit analyst at JPMorgan in New York, called pension reform ''absolutely critical to the Northwest restructuring story. You can make an argument it's even more important than the labor cost reduction. Without pension reform favorable to Northwest, our view is that Northwest will file for Chapter 11 protection.''

Other items on Northwest's lobbying report included:

- Legislation to require air carriers to provide flights to ticketed passengers on airlines whose flights have been canceled due to airline bankruptcy or insolvency;

- Legislation to raise the age requirement of 60 for commercial airline pilots to the age when pilots are eligible for Social Security;

The lobbying reports do not specify whether the airline lobbied for or against these bills, and Northwest officials declined to comment.

Northwest is Michigan's largest passenger air carrier and has a hub at Detroit Metropolitan Airport.

Copyright 2005 Associated Press

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