‘Intense’ NWA talks continue

03/03/2006

Judge gives airline, pilots more time to reach deal

BY MARTIN J. MOYLAN
Pioneer Press

With another “deadline” to get a deal done come and gone, Northwest Airlines and its pilots continued Thursday to negotiate a contract that would save the bankrupt carrier hundreds of millions of dollars a year — and avoid a strike that could destroy it.

The pilots union said talks were “intense” and were expected to continue through Thursday night.

Northwest was more upbeat. “We are continuing to meet with representatives of the pilots union, and we continue to make progress on a new contract,’’ spokesman Bill Mellon said.

The progress apparently satisfied New York Bankruptcy Judge Allan Gropper. As long as he’s convinced the airline and union are likely to bargain a deal on their own, he appears inclined to let them talk. His other option would be to reject the pilots’ contract and position Northwest to impose new wage and other labor terms on them.

On its Web site, the union said Northwest could even “technically” impose a contract on the pilots now, pending a decision by Gropper. But the union said it does not expect the company would do that without warning.

The pilots have threatened to strike if a contract is imposed on them. About 92 percent of pilots have voted to authorize union leaders to call a strike if they deem it necessary.

Northwest really doesn’t want to impose a deal, said Vaughn Cordle, chief analyst at aviation consultant AirlineForecasts and a pilot for a major airline.

“If they don’t get a voluntary agreement and impose one, they will have a labor problem and that impacts customer service and that impacts revenue,’’ he said.

Pilots and other Northwest workers are rightly upset about the big wage and other givebacks the airline wants from them.

“But they will have to work more for less,’’ Cordle said. “That’s the grim reality of today’s (airline) industry.

Management and labor need to salvage the company. … They have no choice but to follow United (Airlines) and US Air down the path of higher productivity and lower labor and nonlabor costs.” Both of those airlines recently emerged from bankruptcy.

Gropper initially set Friday, Feb. 24, as a deadline for Northwest and its pilots to reach a negotiated settlement. He then pushed it up to this past Wednesday.

Whether the pilots can strike is a hotly contested question that likely would head to court. Northwest insists a pilots’ strike would be illegal if it imposes a contract on them, and has warned a walkout could put the airline out of business.

The pilots union argues a strike would be legal.

But would Northwest’s 5,000 pilots strike and risk the loss of six-figure jobs and handsome pensions? Would Northwest squeeze them so much that the pilots would entertain such a murder-suicide scenario?

“I’d bet there’d be no strike because it would be the death of Northwest — and the employees’ jobs,” said Cordle.

In the end, both sides likely will compromise, said John Remington, a professor of industrial relations at the University of Minnesota.

“I think they’ll grind out a settlement by the end of the week,’’ he said. “I don’t think we’ll have a strike. If they weren’t close to a settlement, I don’t think the judge would continue to let them negotiate.”

Northwest has been trying to extract big givebacks from its unions for about three years as it racked up billions of dollars in losses. The airline is trying to reach a deal with its pilots to cap a drive to cut annual labor costs by $1.4 billion. Northwest is aiming to get about $600 million in savings from its pilots through wage cuts, work rule changes, benefit reductions and other givebacks.

With a recent interim 24 percent pay cut on top of a 15 percent pay cut the pilots accepted in November 2004, the pilot pay scale now ranges from about $27,000 to $160,000. In court filings, Northwest has indicated it is looking to replace the interim cut with a 28 percent permanent cut.