Pilots, flight attendants and ground workers at Northwest Airlines are on the brink of decisions that will ripple through the airline industry and the Memphis economy for years to come.
Accepting the latest contract offer from Northwest management would be a bitter pill, in particular, for the well-trained cockpit professionals who bear responsibility for getting us safely to our destinations and back home again.
But it would also acknowledge momentous change in the industry that has driven Northwest into bankruptcy and threatened the survival of the legacy carrier that uses Memphis International Airport as one of its hubs.
The airport is a $20.8 billion-a-year economic engine for the community, according to a University of Memphis study, and the Northwest hub is one of its cylinders. The local travel market is not large enough to sustain as many flights as a hub produces, so it plays a disproportionate and extremely beneficial role in the local economy.
The airline weathered a strike by mechanics last fall but had issued dire warnings about the consequences of a strike by pilots that union leaders found credible. Accept big pay cuts, union leaders are urging the pilots, and help keep Northwest planes in the air and the company afloat.
Under the terms of an agreement discussed by officials of the Air Line Pilots Association over the weekend, pilots are being asked to accept on a permanent basis the 24 percent pay cut agreed to on a temporary basis last fall, to be followed by small pay increases from 2008 through 2011.
On top of a pay cut accepted by pilots in 2004, the latest round has been painful for one of the industry's best-compensated employee groups. Pilots also are being asked to approve an increase in the maximum number of hours that pilots would be asked to fly, from 80 to 88 hours per month, and other fringe benefit concessions.
Northwest may have won over the pilots, however, by backing away from a major outsourcing proposal that would have led to the creation of a new Northwest subsidiary.
Another impetus may have come last week when Northwest flight attendants reached a tentative agreement that essentially left the pilots isolated in their effort to stave off dramatic reductions in pay and benefits.
The tentative deal with the Professional Flight Attendants Association, which also awaits a membership vote, is expected to save the carrier $195 million a year in labor costs. Another $358 million would be saved by the pilots' agreement. Agreements with two organizations representing ground workers would save the company another $190 million a year.
Northwest has also reported cuts among salaried workers and management. It filed for bankruptcy Sept. 14 and posted a $1.3 billion loss for the fourth quarter of 2005, stretching its post-9/11 losses to some $4 billion.
More adjustments may be required in the effort to pay unpredictable rises in the cost of fuel and to compete with the increasingly important discount airlines that have driven much of the recent change in the airline industry.
Signed agreements with its employee groups would go a long way toward putting Northwest back into a competitive posture in the industry and deliver a shot in the arm to the Memphis economy.
Union Votes pending
Averting strikes by key airline employee groups would have positive effects far beyond the industry.
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