Northwest Airlines on Monday rejected an offer from federal mediators to settle the airline's stalled contract talks with its mechanics through binding arbitration. That pretty much assures the forthcoming start of a 30-day countdown to a possible strike or lockout by the airline.
Once the National Mediation Board officially declares the talks are deadlocked, the airline and union will have 30 days to nail down a contract.
An "impasse" finding is a foregone conclusion now, said John Budd, a professor of human resources at the Carlson School of Management at the University of Minnesota.
Arbitration could occur only with the approval of both Northwest and the union.
"I think the clock will start ticking quite soon," he said. "It's no surprise."
Both Northwest and the mechanics union had asked the National Mediation board to declare their talks deadlocked.
The union, the Aircraft Mechanics Fraternal Association, is wrapping up a strike vote today. The union likely will announce resounding support to authorize its leaders to call a strike.
Northwest, which has vowed to fly its full schedule even if mechanics strike, said it believes a hard deadline will help it reach a settlement. That's been the case at other airlines that sought big wage givebacks from labor. In those other cases, threats of strikes or bankruptcy preceded last-minute deals.
In the past four years, Northwest has lost about $3 billion on its operations. It insists that it needs big wage and other givebacks from employees to get back in the black and compete with low-fare carriers, such as Southwest Airlines, as well as old-line rivals, such as American and United, which have slashed their labor costs.
But Northwest's drive since February of 2003 to extract labor-cost givebacks from its highly unionized employees has been largely unsuccessful. While its target is now $1.1 billion in annual labor savings, Northwest has only $265 million in concessions from its pilots union and $35 million from management and salaried employees.
The airline's big labor battle now is with its mechanics and cleaners, both represented by the same union. Northwest has about 4,800 of them left on its payroll, having laid off some 4,400 since the end of 2000. Northwest wants to cut their wages by about 25 percent and eliminate more of their jobs, sending additional work to outside shops in the U.S. and Asia. Mechanics can make up to $75,000 a year; cleaners, $42,000, the union said.
The mechanics union has said it would accept 16 percent wage cuts and other concessions that, the union contends, would save Northwest about $140 million a year. But Northwest argues that the mechanics' offer, at best, provides only about half of the $176 million in annual savings the airline wants from AMFA.
