Appeals Court Says Unions Can't Strike a Bankrupt Airline

A federal appeals court left a strike ban in place for flight attendants at Northwest Airlines on Thursday, clearing up a murky area of labor law in a way that unions won't like.

The ruling means flight attendants could still strike, eventually, if they first exhaust the lengthy requirements of airline labor law. But federal mediators have refused to declare the talks at an impasse, a critical step in that process.

The ruling focused on when employees at a bankrupt company can strike.

Northwest won concessions from its other unions as it reorganized under bankruptcy protection over the past year. Two successive flight attendant unions negotiated concessions only to have them rejected by the rank-and-file. In response, Northwest - with a bankruptcy judge's permission - imposed pay cuts and work rule changes July 31.

Flight attendants claimed a right to strike because, they said, Northwest's action amounted to the kind of unilateral change prohibited by the Railway Labor Act, which governs airlines and railroads.

Northwest had argued that a strike could put it out of business. And a federal judge blocked union plans for random, unannounced walkouts.

That injunction was upheld unanimously by three members of the Second Circuit Court of Appeals in New York, although one of the judges concurred for different reasons.

The main ruling said Northwest has done its best to follow both bankruptcy law - by getting a judge's permission to impose cuts - and airline labor law - by trying to negotiate a new contract.

"Although this is a complicated case, one feature is simple enough to describe: Northwest's flight attendants have proven intransigent in the face of Northwest's manifest need to reorganize," the judges wrote. They wrote that the union must try harder to convince its members of the need for the cuts.

The ruling leaves the Association of Flight Attendants to decide whether to appeal to the Supreme Court or wait for one of its other strategies at Northwest to pay off. Those include seeking a right to strike if mediators declare an impasse, or a request to U.S. Bankruptcy Judge Allan Gropper for smaller pay cuts because Northwest's financial results have improved faster than expected.

AFA General Counsel David Borer said the union was weighing its options.

"None of the courts have told us we can never strike, all they've said is we have to first exhaust this process" at the National Mediation Board, he said.

Northwest said it was pleased, and that its "central goal remains to reach a consensual agreement with our flight attendants." Spokesman Dean Breest confirmed that the goal for any deal remains the same - $195 million a year in savings from flight attendants.

Charles Craver, a labor law professor at George Washington University, said it was a tough case in a little-tested area of the law.

"They're trying to keep the parties from striking for fear that if they do the entire company will go down, and that would defeat the whole purpose of bankruptcy," he said.

Concessions from workers helped Northwest report a $301 million pretax profit in 2006, not counting bankruptcy expenses. But bankruptcy expenses gave it a loss of $2.84 billion. On Thursday it reported a $33 million loss for the month of February, but that included a $48 million charge for reorganization expenses.

Northwest has said it plans to give 4,000 non-union employees $77.4 million in cash and stock as part of a bonus program after it emerges from bankruptcy. And it has not revealed details of its plan to compensate executives, although it has withdrawn a $129 million bankruptcy claim it planned to submit on their behalf.

"If they cannot spare a penny for flight attendants, then in no sense can they give millions of dollars to management," Borer said.

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