Northwest Airlines asked a bankruptcy judge Monday to impose a temporary 19 percent wage cut on its baggage handlers, reservation agents and other ground workers.
If the motion is approved, the savings would amount to $114 million a year, or 60 percent of what the air carrier is seeking in permanent cuts.
The Eagan-based airline also asked the court to approve the temporary pay cut agreements it has reached last week with the unions representing its pilots and flight attendants.
The International Association of Machinists, which represents the 14,400 ground workers, was the lone holdout.
"If Northwest does not obtain prompt labor relief, it will have such low liquidity that any further reduction in revenues or increase in costs could push it into liquidation," Northwest's Chief Executive Doug Steenland said in a court filing.
Northwest earlier had filed a motion asking the court to revoke the labor contract of unions that failed to agree to its required concessions. But if the temporary cuts are approved, the unions will have more time to work out permanent deals. Northwest has asked for a mid-November hearing date.
"It allows the parties to have additional time to reach consensual agreements for permanent cost savings," said Northwest spokesman Bill Mellon.
In a letter to IAM members Monday, Bobby De Pace, president of the union's District 143, characterized the temporary cuts as "unfortunate and regrettable."
"We don't agree with the pay cuts that the company is imposing on our people and we don't agree on how they did it," De Pace said.
If Northwest does not obtain the temporary pay cuts, with permanent cuts soon after, the carrier "faces a grave risk of irreparable harm," it said in a court filing. If it doesn't receive approval of temporary pay cuts, Northwest will proceed with its request to abrogate the unions' contracts.
Northwest, which is operating while in bankruptcy, is seeking $1.4 billion in annual labor savings.
The airline's pilots union, the Air Line Pilots Association, agreed to temporary 24 percent pay cuts and other reductions amounting to $215 million a year. That agreement is subject to its members' approval. The Professional Flight Attendants Association agreed to temporary cuts of $117 million, including pay cuts of 21 percent.
A temporary deal was not reached with the IAM in part because the union doesn't agree that the $190 million the airline is seeking in permanent cuts is appropriate. The union is still analyzing that long-term proposal, said Joseph Tiberi, an IAM spokesman.
On average, IAM workers make about $20 per hour, De Pace said. Some clerical workers make as little as $8.56 per hour. For people making low hourly wages, the 19 percent cuts are "excessive," he said. "Our people can't live on 19 percent pay cuts," he said. "You've got people making 10 to 12 bucks an hour; it's very hard to pay their bills."
Northwest is also asking the court to reduce the amount of sick pay to a rate of 75 percent of the prevailing wage, down from 100 percent currently.
"The bottom line is, the company has the right to do this in bankruptcy court," De Pace said. "It's that simple."
He wasn't sure how much more time the union would have to work out a consensual agreement. "If Northwest goes ahead and gets this done, what is the new time line going to be? Will it be one month, two months or three months?"
The intent is to reach negotiated deals with the three largest unions "in the very near future," Mellon said. The carrier has said it must reduce its labor costs to achieve $2.5 billion in overall annual cuts that it is seeking in a restructuring.
Julie Forster can be reached at [email protected] or 651-228-5189.
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