Northwest Says High Labor Costs Could Put it Out of Business

"We have been preparing for expedited negotiations. We continue to meet with NWA management and believe we can reach a negotiated settlement, but only if management doesn't overreach in negotiations," said Will Holman, spokesman for the Air Line Pilots Association.

Northwest also wants to cut about $80 million in medical costs for retirees. The airline wants current retirees under age 65 to pay half the cost of benefits. For pilots, it wants to eliminate medical coverage for retirees older than 65.

Typically, requests to reject contracts in bankruptcy lead to quicker agreements as the two sides try to settle before a judge has a chance to make a decision, Pottow said.

Northwest on Wednesday also detailed cuts for salaried workers that will take effect in December.

Northwest eliminated merit pay raises of 2.5 percent that were supposed to be given Oct. 1. Northwest plans a 5 percent salary cut for all employees until the airline emerges from bankruptcy and increasing medical premiums for salaried workers. The same cut has been proposed to unionized employees.

Northwest points to low-cost carriers as the model for the airline's new labor structure.

The company says that this year the average compensation for Northwest's employees is 62 percent above the average paid to employees of low-cost carriers.

If Northwest gets all of the concessions it wants, the airline's cost to carry one passenger one mile would go from 4 cents to 2.6 cents.