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Thursday, March 11, 2004
Northwest pilots discuss cuts
Union calls proposal to trim $442 million too extreme. Contract expired in September
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ST. PAUL, Minn. — Leaders of the pilots union at Northwest Airlines have begun a week of meetings that could determine the fate of the carrier’s drive to slash its labor costs.
Northwest CEO Richard Anderson declared 13 months ago that the carrier’s long-term health depended on cutting labor costs by $950 million a year.
On Tuesday, leaders of the Northwest chapter of the Air Line Pilots Association gathered here to begin weighing the company’s request. The meetings are scheduled to last through Monday.
Northwest’s labor costs are the third-highest in the industry, and Wall Street analysts repeatedly have asked Northwest executives when they expect to forge cost-cutting agreements. Union leaders representing flight attendants, mechanics and ground workers have said they oppose any cuts in wages or benefits.
Pilots, the highest-paid group at the airline, viewed Northwest’s initial proposal for $442 million in pilot labor cuts as too extreme. But ALPA has left open the possibility that its members would accept some compensation cuts to help the carrier return to profitability.
The contract for the 6,173 Northwest pilots expired last September.
Northwest, the largest carrier at Detroit Metropolitan Airport, has lost about $2.2 billion during the past three years on its airline operations. Meanwhile, two of its biggest rivals, United and US Airways, cut their labor costs in bankruptcy court. Another, American, used the threat of a bankruptcy filing to wring wage concessions from its workers.
“Our labor costs have got to get in line with where American, United and others are today,” Anderson said recently.
Hal Myers, a pilot and Northwest ALPA spokesman, said the pilots will determine whether an “investment agreement” is justified.
The pilots refuse to use the term concessions, Myers said, because it implies that the pilots would give up something and get nothing in return.
If the pilots choose to invest in Northwest’s future by taking some short-term cuts, they will do so only by negotiating an agreement that includes future financial rewards, Myers said.
Anderson has acknowledged that pilots will consider cutbacks only if they are paired with some type of future financial benefits, such as stock or profit sharing.
While the pilots acknowledge the financial challenges facing Northwest, they are attempting to preserve gains that they made in previous contract talks.
This week, Northwest’s financial condition and future obligations are being dissected by ALPA’s own financial experts and staff from the Peter J. Solomon investment banking firm attending the meetings.
By the way, how is NW doing?