Judge gives NWA, unions time

02/26/2006

More talks may avert strike

February 25, 2006
Detroit Free Press

NEW YORK—Hope grew Friday that Northwest Airlines could reach a cost-cutting deal with its 14,000 pilots and flight attendants, ending the threat that a federal bankruptcy judge would void its union contracts and provoke a strike that could destroy Detroit’s dominant carrier.

U.S. Bankruptcy Judge Allan Gropper had the power to throw out Northwest’s labor contracts if no agreement was reached by 5 p.m. Friday. But after hours of private discussions with company and union negotiators in his New York offices, Gropper sent them back to the bargaining table.

All sides told Gropper they were making progress and a settlement appeared more likely than it had a week ago. So the judge extended the deadline to Wednesday, the second such extension he’s granted.

“This has been a long and arduous process for our members and our union negotiators,” Guy D. Meek, president of the Professional Flight Attendants Association, said in a statement. “Nevertheless, we are grateful Judge Gropper continues to have faith in our abilities to reach a consensual agreement.”

Will Holman, spokesman for the Air Line Pilots Association, said, while the talks are continuing, “management still needs to address issues that are important to pilots,” such as their request that pilots be given partial ownership of the airline when it emerges from bankruptcy.

While the Eagan, Minn.-based airline also welcomed the extension, it indicated this might the last delay it would accept. Northwest is losing $3 million to $4 million a day, and its statement emphasized that “achieving the needed labor cost savings as soon as possible is critical.”

Indeed, the fate of the nation’s fourth-largest airline, which employs 7,700 Michiganders and operates its largest hub at Detroit Metro Airport, hinges on these talks.

Northwest filed for bankruptcy Sept. 14 after losing more than $4 billion since 2001, the victim of everything from sagging travel after the 9/11 terrorist attacks to soaring fuel prices, competition from low-cost carriers and some of the industry’s highest labor costs.

It followed United Airlines and USAirways into bankruptcy, where it also hopes to use the court’s broad powers to wipe out billions of dollars in debt, cut its labor costs and let it emerge as a leaner, stronger airline able to compete with the nation’s low-cost carriers.

Northwest says it needs to reduce its payroll and benefits costs by $1.4 billion a year to accomplish that. It includes $361 million from its pilots and $195 million from flight attendants. The unions represent 5,000 active pilots and 9,000 active flight attendants and say Northwest’s demands are unreasonable.

Northwest’s pilots gave up 15% of their wages as part of $250 million in concessions in 2004, knowing the airline would be asking for more cuts the following year. In a second round of negotiations last fall, the airline sought 28.4% in pilot wage cuts. In October, Northwest asked Gropper to use his power to void its union contracts and impose a settlement that would dramatically cut union members’ pay, benefits and jobs.

To win more time to negotiate, the pilots temporarily gave up another 19% of their pay in November, knowing the airline would want more of their wages. The flight attendants also agreed to a short-term 19% pay cut at that time, which is actually more than the 17.5% cut the airline is seeking.

As Northwest has pushed those and other demands on the unions, they have asked their members to approve strikes if Gropper voids their contracts. The pilots are to complete a strike authorization vote Tuesday, the flight attendants on March 6.

Industry experts expect a strike would shut down the carrier, which operates 500 flights a day out of Metro Airport and probably lead to its closure and liquidation.

But hope for a deal between Northwest and its pilots grew this week when the airline backed off from demands to launch a new subsidiary to fly planes that carry 70 to 100 passengers. Instead, those jobs are to stay in the company.

But outsourcing remains an issue for flight attendants, who are fighting Northwest’s demands to hire foreign workers for some of its international flights.

Northwest customers have struggled to make travel plans as the labor dispute unfolds. Some are holding off on plans. Some are booking alternate airlines. But some are just crossing their fingers and hoping for the best.

“We haven’t had a lot of advance reservations for May and beyond yet, which probably means people are waiting to see what happens in the next couple weeks,” says Kim Bedford, agent at Corporate Travel Service in Dearborn Heights.

Sharon Knoppow of West Bloomfield is scheduled to fly Northwest today for a month in Puerto Vallarta, Mexico. She was nervous all week and is glad the airline is still flying.

“We’re coming back on Continental, luckily,” she says.

Meanwhile, Northwest commuter carrier Mesaba Airlines embarked Friday on a similar path in a bankruptcy court in Minnesota.

Friday morning, Judge Gregory F. Kishel began hearing Mesaba’s request to terminate its labor contracts with its mechanics, flight attendants and pilots. Mesaba operates 89 flights a day at Detroit Metro.

The carrier wants to cut wages by 19.4% for all three groups. Mesaba, like Northwest, also faces a strike threat. On Friday, the carrier’s pilots union said its members authorized labor leaders to call a strike if Kishel terminates the pilots’ contract.