Northwest Airlines Fate Could Hang on Judge's Decision

Feb. 16, 2006
Union negotiations at Northwest Airlines are in a critical phase this week, with a judge expected to rule Friday on whether the company can throw out contracts with pilots and flight attendants.

Union negotiations at Northwest Airlines are in a critical phase this week, with a judge expected to rule Friday on whether the company can throw out contracts with pilots and flight attendants.

If bankruptcy judge Allan Gropper in New York lets Northwest out of its contracts, the nation's fourth-largest carrier would be free to impose new rules on pilots and flight attendants. Besides pay cuts, Northwest wants to start a subsidiary to handle small-jet flying and wants to hire more nonunion foreign nationals for many of its flights to Asia.

Both groups say they may strike if the carrier is released from its contracts. But the work stoppages won't happen right away. The pilot strike vote runs through Feb. 28, and flight attendants won't finish voting until March 6. The pilots' union has said talks are likely to continue beyond Friday's ruling.

Northwest, which filed for bankruptcy protection in September, has said a strike could kill it, which would put pilot pensions at risk.

The carrier also says a strike would be illegal. That's because airline-union relations are governed by the Railway Labor Act, which lays out a lengthy pre-strike procedure that hasn't been followed at Northwest.

Duane Woerth, president of the Air Line Pilots Association, scoffed at that idea, saying, "How can you be ordered to work when you don't have a contract?"

What would a judge say? No one knows for sure. Workers at other bankrupt airlines have threatened strikes, but ultimately made deals.

One of the closest calls happened in January 2005 when a judge ruled that US Airways could cancel its contract with the International Association of Machinists. The IAM, which threatened to strike, approved the company's original pay-cut offer about two weeks later.

Attorney Bob Siegel represented US Airways in that case. He said he argued that airline unions cannot strike right away if their contract is rejected, but he's never found out whether the courts agree.

"I don't think the bankruptcy judges have been required to think this one through yet," he said.

Siegel said he believes that while the unions couldn't strike right away, they could still negotiate under the Railway Labor Act and strike once that process runs its course.

"Under my analysis, the union does have a right to strike - it's just a matter of timing."

Law professor Neil Bernstein said he believes the unions could strike right away. Bernstein, an expert on the Railway Labor Act who tracks airlines at Washington University in St. Louis, said, "I think it's fairly obvious. If their contract is abrogated, they have to have the right to strike."

Bernstein said the judge's main concern is helping the airline sort out its financial problems and survive - not how much the workers get paid.

"There's a strong inclination for these judges to give the company what it wants," otherwise it goes into Chapter 7 bankruptcy and the pieces are sold, he said.

Northwest declined to comment.

Mark McClain, the head of the Northwest unit of the pilot's union, said the airline hasn't told them whether it will impose its new pay scales and working conditions right away if the judge allows it to on Friday.

"They have held their cards extremely close to the vest," he said. "We've asked, believe me."

Talks have been running 12 to 14 hours a day, McClain said.

"Our goal remains a consensual agreement," he said.

Separately, Gropper approved renegotiated leases on one Boeing 747 and one 757. Also Northwest was allowed to enter a new financing agreement for 11 other planes - nine 757s and two 747s.

Northwest spokesman Kurt Ebenhoch declined to specify how much the carrier will save through the renegotiation of the leases and financing agreements.

Many carriers lease their planes, and those costly leases are often among the first contracts that carriers seek to renegotiate in bankruptcy.

Also, the judge approved a settlement between Northwest and Sabre Holdings Corp. Sabre manages a computer reservation system. Its dispute with Northwest over fees paid by the airline for tickets purchased on the Sabre system was resolved in January.


Associated Press Writer Aleksandrs Rozens in New York contributed to this report.

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