Northwest to eliminate 4,900 jobs, trim schedule
Advertiser News Services
The airline industry ran into more turbulence yesterday, as the shaky economy and the war with Iraq continued to pummel the beleaguered sector.
Bloomberg News Service
Northwest Airlines announced plans yesterday to cut 4,900 jobs and reduce its flight schedule by 12 percent, while United Airlines said it will trim its schedule by about 8 percent and lay off an undetermined number of workers. Both cited the impact of the war in Iraq.
The U.S. war with Iraq allowed Northwest Airlines to invoke the "force majeure" clause in its labor contracts, which freed the airline from stipulations that make it difficult to cut jobs. In the past two years, Northwest has cut nearly 17,000 jobs.
And two carriers joined United in bankruptcy proceedings: Hawaiian Airlines, founded in 1929, and Aerovias, Colombia's largest carrier.
Since the Sept. 11 terrorist attacks, major airlines have laid off roughly 100,000 employees, and industrywide capacity is off about 14 percent from two years ago.
St. Paul, Minn.-based Northwest said it would use layoffs, attrition, voluntary leaves and leave open positions unfilled to make the job cuts. A relief package including pay, medical coverage and flight privileges will be offered to the affected employees, the airline said.
The cuts include 2,000 mechanics, 1,400 flight attendants, 630 baggage handlers and customer service agents, 250 pilots, 125 cleaners, 300 management and 150 clerical positions, and 40 stock clerks, said Paul Volker, legislative officer for the Aircraft Mechanics Fraternal Association Local 33.
Northwest, which also plans to idle 20 planes, has already laid off about 12,000 employees because of the slump in the airline industry.
"Clearly, the last two years have been a difficult and painful period for our employees," chief executive Richard Anderson said. "Due to the weak demand for business travel which emerged in March 2001, the subsequent impact of the terrorist attacks on the United States in September of that year, and now, armed conflict with Iraq, we have been forced to reduce our workforce by some 17,000 employee positions."
Volker said Northwest officials told his union's leaders earlier yesterday that the airline intended to invoke the "force majeure" clauses in its labor contracts. That's the legal term for uncontrollable events that release parties from their contractual obligations. That would free Northwest from union-negotiated agreements related to seniority and work rules — stipulations that can make it difficult to cut jobs.
Analysts said earlier this week that the war could give airlines reason to cut costs via the force majeure clause, which they used after the Sept. 11 attacks. Most of the major carriers are suffering under excessive labor expenses, poor economic conditions and the decrease in spending by business travelers.
United said it will eliminate 104 U.S. flights as of April 1 and 20 international flights effective April 6. It said it would reduce service to Amsterdam, Netherlands; Frankfurt, Germany; London; Tokyo; Paris; Taipei, Taiwan; and Brussels, Belgium.
The Chicago-based airline, which currently operates about 1,700 daily flights, will reduce that number to 1,574, not counting the 1,478 operated by its regional partners as United Express flights.
United, Hawai'i's major national carrier, said the flights serving Hawai'i would not be affected.
While the company said it had not yet made final the number of employees being put on temporary leave, its unions disclosed a day earlier that 2,300 flight attendants and 1,100 Indianapolis-based mechanics would be among those laid off.
"We saw a drop in future bookings as a result of the threat of war, and we expect this to continue with the onset of war itself," said Greg Taylor, a United senior vice president.
United had warned its employees the cuts would be coming because of both the travel slump resulting from Iraqi war jitters in recent weeks and the strict financial benchmarks it must meet to retain its bankruptcy financing.
The airline, which filed for Chapter 11 bankruptcy protection Dec. 9, lost a record $3.2 billion last year and has pegged its operating loss for the first three months of 2003 at about $870 million.
"We are at a point where we must curtail or delay all work not critical to the company's safe operation or successful emergence from bankruptcy," said senior vice president Sara Fields.
Earlier this week, Continental Airlines said it will cut its workforce by about 1,200 people by the end of the year to save $500 million. More layoffs are planned if war with Iraq is prolonged and air travel remains soft.
American Airlines, the world's No. 1 carrier, said Thursday it will cut international flights by 6 percent in April to meet a downturn in travel bookings due to the war in Iraq and could make additional reductions if traffic remains slow.
