Northwest Mechanics Talks at Impasse

The union representing Northwest Airlines' mechanics and cleaners is seeking a go-ahead from federal mediators to strike the carrier.

On Tuesday, the union asked the National Mediation Board to declare that contract talks with Northwest are deadlocked, setting up the union to strike after a cooling-off period.

It's a major change of heart for the mechanics union. Union leaders last month vigorously opposed a similar request by Northwest Airlines, which the mediation board rejected.

The mechanics union now believes Northwest won't budge from its original contract demands.

"We felt Northwest would be serious and negotiate with us," said Jeff Mathews, contract administrator for the Aircraft Mechanics Fraternal Association. "They have not moved from their original position. That's not how negotiations work."

If the mediation board releases the Eagan-based airline and union from bargaining, that would start a 30-day countdown to a possible strike or lockout.

"The NMB could answer tomorrow or wait several weeks,'' Mathews said. "But since both parties have now asked to be released (from bargaining), I see no reason why they won't grant the release."

Such a deadline might be what is needed to get a deal done, Northwest CEO Doug Steenland suggested last month at a Wall Street investment conference.

At Mesaba Airlines in 2003, the mediation board declared an impasse after both the Northwest regional carrier and its pilots said contract talks were deadlocked. A settlement was announced a few hours after a strike deadline passed.

"But they (the NMB) are not required to declare an impasse just because both sides ask for it,'' said a source familiar with the board's decision-making process. "It's not automatic."

In a press release issued late Tuesday, Northwest said it wants to reach a "consensual agreement'' with AMFA that is fair to employees and allows Northwest to be competitive.

"Whether and when the NMB will release the parties from further mediation is a matter within the NMB's discretion,'' the airline said.

Northwest, which has vowed to keep flying if the mechanics strike, said customers can continue to book future travel with confidence.

MFA members, meanwhile, are taking a strike vote through July 19. Approval would allow the national leaders to call a strike after the end of the cooling-off period.

Overall, Northwest is seeking $1.1 billion in annual wage and other givebacks from employees. After more than two years of pressing employees for concessions, though, the airline only has $300 million in hand, mostly from its pilots union.

The mechanics last month said they would accept 16 percent wage cuts and other concessions that they said would save Northwest about $140 million a year. But Northwest says the mechanics' offer, at best, only provides about half of the $176 million in annual savings that the airline wants from AMFA.

Northwest has lost nearly $3 billion on its operations since the start of 2001. Unless it wins big labor cost givebacks and the federal government gives it more time to make payments to its pension plans, underfunded by $3.8 billion, analysts expect the carrier will land in bankruptcy.

In a speech Tuesday at the University of Minnesota, Steenland reiterated Northwest's determination to cut labor costs by $1.1 billion annually "one-way or another."

But flight attendant union leaders in attendance weren't swayed. After Steenland's speech, they said they're not ready to follow the airline's pilots and mechanics and talk givebacks.

"Flight attendants are not in a position where they'll give anything at this point,'' said Jeff Gardner, vice president of the Professional Flight Attendants Association.

Union President Guy Meek said the big question is whether wage and other concessions would keep Northwest out of bankruptcy.

Northwest wants $148 million in annual wage and other savings from flight attendants and the airline "doesn't care how they get that," said Peter Fiske, another union leader.

Gardner said such a giveback would cost each flight attendant about $13,000 a year. Flight attendant salaries start in the $20,000 range, and the most-veteran flight attendants can top $40,000 a year.

"How can a flight attendant afford ($13,000)?" asked Gardner.

Northwest shares fell 24 cents Friday, to close at $4.19, its lowest close in a year. Bankruptcy jitters have clearly set in among investors, who likely reacted to an earlier Northwest Securities and Exchange Commission filing citing the prospect.

But Prudential analyst Bob McAdoo said in a note to investors Tuesday that strike talk is common in the airline industry, and that he believes Northwest will get its labor cuts. "We would be surprised if there is any resolution to the labor issues in the very near future," he wrote before the mechanics asked to be released from talks.

"It is unlikely Northwest will seek bankruptcy protection anytime in the near future," he wrote. "Its labor negotiations, whether successful or not, will likely drag on well into 2006. Its troublesome catch-up pension payments do not occur until 2006." And even if it fails on both pension changes and labor costs, cheaper oil would probably be enough to keep Northwest out of Chapter 11, he wrote.