Northwest, Pilots Release Details of Deal

March 7, 2006
A temporary 24 percent pay cut that Northwest Airlines pilots took in November will stick if the pilots ratify the tentative deal their union reached with the carrier Friday.

A temporary 24 percent pay cut that Northwest Airlines pilots took in November will stick if the pilots ratify the tentative deal their union reached with the carrier Friday.

The Air Line Pilots Association released some details Sunday about the tentative agreement with the airline, which is based in Eagan, Minn., and reorganizing through Chapter 11 bankruptcy.

The two sides had been negotiating around the clock before reaching a deal Friday afternoon. The tentative deal keeps a bankruptcy judge from having to decide whether he should throw out the pilots' contract and allow Northwest to impose lower wages and new work rules, a prospect that prompted the pilots to threaten to strike. A strike would have shut down the airline and could have put it out of business.

The agreement keeps the 24 percent pay cut and includes raises of 1.5 percent in 2008, 2009 and 2010, and a 2 percent raise in 2011. The pilots' pay cut falls about 4 percent short of the cut Northwest sought in October, said Wade Blaufuss, ALPA communications chair.

The 24 percent pay cut is on top of previous wage cuts. The pilots took a 15 percent pay cut in 2004, part of a concessionary deal that saved the airline $250 million a year.

With the 24 percent cut, a Boeing 747 captain in his 12th year who flies 75 hours a month, a typical schedule, saw his base wage drop from $220.88 an hour in flight, or about $198,700 a year, to $168 an hour, or $151,200 annually. A 12th-year DC9 first officer's base hourly wage dropped from $111 an hour in flight, or $99,900 a year, to $84 an hour, or $75,600 a year.

The tentative deal increases the maximum hours the airline can ask pilots to fly, from 80 to 88 hours per month, not including layovers or delays. The deal also reduces sick pay and days off.

"It's a bitter pill to swallow," Blaufuss said Sunday. "It's like a grieving process. First, there's feelings of anger and denial, and eventually, some pilots may reach that point of acceptance that this is a necessary sacrifice."

The tentative deal gives pilots a 5 percent matching contribution to their retirement plans while Northwest is in reorganization. The airline's contribution climbs to 8 percent through the life of the contract. At the company's request, pilots agreed last year to freeze their traditional pension program and convert to a 401(k)-style plan.

The most contentious issue in these talks has been the airline's wish to outsource the flying of 76- to 100-seat jets to a proposed new Northwest subsidiary. The airline withdrew that proposal, and the two sides agreed to a framework so those flights stay with Northwest pilots, stemming layoffs. The two sides agreed on a lower pay scale for pilots who fly new planes of that size that Northwest adds to its fleet, Blaufuss said.

The tentative deal would save Northwest $358 million a year. It was the last piece of $1.4 billion in annual savings Northwest wanted to cut from its labor costs.

That represents 37 percent of the airline's $3.8 billion in annual labor costs before it started making cuts in 2004.

Northwest filed for bankruptcy Sept. 14 after losing more than $4 billion since 2001, citing sagging travel after 9/11, soaring fuel prices and competition from fare-setting, low-cost carriers.

The airline also reached a tentative deal with its flight attendants last week, saving the carrier $195 million a year. Dates for votes to ratify the attendants and pilots deals have not been set.


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