Northwest's labor woes may be nearing close
By Jewel Gopwani
Detroit Free Press
DETROIT -- A new settlement between Northwest Airlines and its flight attendants union would mean deep wage cuts for 7,300 flight attendants.
But if workers approve the proposal, Northwest would have its final cost-cutting contract in hand, a turning point for the airline.
Securing concessions from all its unions is a crucial part of Northwest's plan to exit Chapter 11 bankruptcy protection. Neither the airline nor the union would discuss the deal's details Monday.
But the proposal would save Northwest $195 million a year, in part by paying flight attendants less and charging them more for medical benefits.
If flight attendants OK the cuts, Northwest could enact new contracts with other unions that save the airline another $550 million annually. Northwest expects to learn the flight attendants' decision by July 31.
The progress Northwest made in round-the-clock talks for the last week has the potential of driving Northwest's labor costs down and allowing the company to focus on the tasks ahead, all aimed at saving money and reinventing the airline.
"Now that they've hopefully got the labor war behind them, they really need to start moving out in a whole bunch of areas in a very positive way," said Robert Mann, president of R.W. Mann &; Co., an airline consulting firm in Port Washington, N.Y.
Here are three challenges that Northwest needs to address.
Pensions: Northwest's next most pressing issue is in the hands of Congress.
On Tuesday the company and its unions plan to fly as many as 300 employees to Washington, D.C., to ask lawmakers to pass legislation this month to give Northwest up to 20 years to pay $3.7 billion into its pension fund.
Under current laws, Northwest would have to pay its pension debt soon after emerging from bankruptcy.
That prospect, the company says, would force it to take the same path as US Airways and United Airlines, handing the debt to the federal government. Doing so would slash pension payments for pilots and could scale back the retirement income for other workers.
Mesaba: Even with a tentative deal with its flight attendants, Northwest's labor woes aren't over.
A storm of strike threats is building at Mesaba Airlines, a regional commuter airline.
Mesaba last week won the power to slash wages and change work rules for 1,300 pilots, flight attendants and mechanics -- a move that could prompt a strike.
Talks with pilots are slated to continue Tuesday. The airline must give its unions 10 days' notice before implementing terms, which gives the parties a last chance to reach a deal.
Mesaba says a strike would be illegal, and it would try to block a strike in court.
Meanwhile the pilots union said it is appealing the judge's decision that lets Mesaba void its contract.
Compass Airlines: With a ratified flight attendants deal, Northwest would be another step closer to starting its own commuter carrier, Compass Airlines.
By implementing cost-saving contracts with its pilots, the company can have the work rules it needs to build the pilots staff at Compass.
The new airline, which would handle a portion of Mesaba's flying, is one way Northwest could gain more control over its costs. It would help update Northwest's fleet and let the carrier more efficiently match its planes with demand.
But so far the carrier has pushed back the launch of Compass from June to September.
The company is waiting for approval from the Department of Transportation to transfer federal certification from bankrupt Independence Air to Northwest.
In filings with the government, Northwest said it plans to start the carrier with flights between Minneapolis and Washington in its first year. Compass would grow to serve routes between small and midsize cities and Northwest's hubs at Detroit, Minneapolis and Memphis, Tenn.