Judge Rules Northwest Can Drop Flight Attendants Contract

Northwest Airlines Corp. can reject its labor contract with some 9,300 flight attendants after months of talks failed to produce an agreement the airline claims it needs to get back on its feet financially, a federal bankruptcy judge ruled Thursday.

Judge Allan Gropper, presiding over the case in the Southern District of New York, ruled Northwest could void its contract with the Professional Flight Attendants Association.

But not for another 14 days.

Gropper admonished the sides to resume negotiations, adding that if they still could not reach an agreement, Northwest could implement terms of a tentative agreement reached with the PFAA on March 1.

The Egan, Minn.-based company's flight attendants rejected that agreement in a vote concluded earlier this month.

"Northwest bargained in good faith with representatives of PFAA. In March, we reached a consensual agreement with the union's negotiating committee whom the flight attendants chose to represent them. The tentative agreement was the result of extensive negotiations involving substantial compromise on the part of Northwest Airlines and PFAA's own negotiating committee," Mike Becker, Northwest's senior vice president of human resources and labor relations, said in a statement.

Northwest (NWACQ) , which sought Chapter 11 bankruptcy protection on Sept. 15, 2005, is seeking to slash its labor costs by at least $1.4 billion a year.

Over the past nine months the airline has managed to hammer out revised labor agreements - all involving givebacks - with all of its other union-represented employees, including pilots, machinists, transport workers and meteorologists.

Personnel costs are typically an airline's biggest. Rising healthcare and pension outlays coupled with soaring fuel prices over the past couple of years and excess capacity in the industry have taken a heavy toll on the nation's oldest airlines.

Rival Delta Air Lines (DALRQ) declared itself bankrupt on the same day as Northwest and is also still struggling to streamline operations and shed costs so that it can raise the financial backing needed to emerge from Chapter 11.

Gropper also granted Northwest an extension of its so-called exclusive period to Jan. 15, 2007, giving the airline an extra six months in which to come up with a reorganization plan. After the deadline expires, Northwest's creditors have two months in which to submit their own reorganization plans to the court.

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