Northwest faces off with unions
By JOHN GALLAGHER
Detroit Free Press
By JOHN GALLAGHER
Bleeding cash, a bankrupt Northwest Airlines heads into a showdown with two of its powerful unions today in a confrontation that could make or break the carrier.
At U.S. Bankruptcy Court in New York, Northwest plans to ask Judge Allan Gropper to let it void its contracts with the Air Line Pilots Association and the Professional Flight Attendants Association. The unions say they'll strike if Gropper grants that request. Northwest says a strike would be illegal, but the unions contest that.
Northwest said in a court filing Friday that if it weren't allowed to get out of its current union contracts, it would have to make "radical changes in its business model, accompanied by massive job losses or liquidation."
It is, of course, an axiom in collective bargaining that a lot of progress can be made on a tight deadline. The airline and its unions could announce a deal on permanent concessions prior to today's 10 a.m. hearing or over the next few days.
Over the weekend, Northwest did reach such an arrangement with its largest union, the 14,000-member International Association of Machinists District 143, representing ground workers.
The IAM is to tell Gropper today that he can postpone their portion of the trial pending a final resolution.
But, so far, the 5,000-member pilots union and the 7,600-member flight attendants union have yet to report similar progress. Karen Schultz, a spokeswoman for the flight attendants, said yesterday that some progress was being made, but that much work remained to be done. Will Holman, a spokesman for the pilots, was even less optimistic.
"There has not been much progress on the vast majority of items. They are still far apart," Holman said.
The worst-case scenario for the public — a strike or other event that grounds Northwest's planes — is unlikely to happen for another month at the earliest, after Super Bowl XL at Ford Field has come and gone on Feb. 5.
The trial before Gropper is expected to take several days, and the judge can take weeks to issue a ruling.
Northwest, like other major carriers, has been suffering huge losses for several reasons, including rising fuel costs, competition from low-cost competitors and the fallout from the 2001 terror attacks on the United States.
Ever since it filed for Chapter 11 bankruptcy protection in September, Northwest has made no secret of its wish to drastically alter its existing labor agreements, which contain some of the highest wage rates and labor costs in the airline industry.
Northwest succeeded in getting temporary concessions last fall, cutting workers' pay by as much as 24 percent. What it seeks now is not simply to make wage cuts permanent, but to achieve a broad restructuring of its work rules, to include reduced staffing levels and shifting work from higher-paid workers to lower-paid workers.
A key sticking point has been the airline's plan to create two new subsidiaries. One new company, dubbed NewCo, would be a feeder carrier flying 76- to 100-seat jets, which would take over many of the routes now flown by higher-paid Northwest pilots.
The other company, dubbed GroundCo, would employ gate and ticket agents and ground workers at Northwest's large and midsize destinations, outside its hubs. At smaller destinations, it wants to outsource that work to GroundCo or another company.
Both plans would whittle the ranks of Northwest's unions by sending jobs out of Northwest to become lower-paying positions at the new subsidiaries.
It's unclear whether the NewCo and GroundCo proposals would survive the current negotiations.
Northwest said in a court filing Friday that it is discussing protections for its pilots, flight attendants and ground workers both within the NewCo and GroundCo structure and in ways that would eliminate the proposed subsidiaries.
IAM District 143 President Bobby De Pace said Sunday that the union had saved many of its jobs in negotiations and that Northwest's proposal that is expected to go to a vote contains many of the union's ideas. But he declined to say whether Northwest still wanted to create the new low-cost subsidiaries.
Darryl Jenkins, who teaches airline management at Embry-Riddle Aeronautical University in Daytona Beach, Fla., said the cutoff between flying for Northwest itself and flying for a regional subsidiary is second only to pay in importance to pilots.
"The likelihood of them giving much on something like this right now is very slim," Jenkins told the Associated Press.
More than a single carrier and its workers and passengers are at stake here.
If Northwest gets its way, other large carriers would be expected to try the same tactic, further lowering wages and union protections across the industry.
Approximately 90 percent of Northwest's more than 33,000 employees are represented by unions.