Bankrupt Northwest Airlines Corp. took a major step toward reorganizing by winning pilot approval for $358 million in givebacks on Wednesday. But its labor troubles aren’t over yet.
Baggage handlers and the airline head to court on May 15 for a trial over whether the airline can reject their contract. Flight attendants are voting through June 6 on pay cuts. And pilots at Northwest’s bankrupt feeder carrier Mesaba Airlines are warning they may strike if their airline imposes pay cuts on them. A decision is due May 11, their union said.
The deal with Northwest pilots will take effect only if flight attendants and baggage handlers also ratify new contracts, the pilots’ union said.
The pay cuts for Northwest workers range from 11.5 percent for ground workers to 24 percent for pilots under the 5½-year deal approved Wednesday. Pilots also took a 15 percent pay cut in late 2004. Just as important, the new deals include major work rule changes. For pilots, that includes allowing Northwest to start a subsidiary to fly jets with up to 76 seats.
“Potentially, the survival of the airline was hanging in the balance,” said Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association. He had threatened to lead pilots out on strike if Northwest cut their pay and changed work rules without pilot consent.
“What we’ve done through this agreement is to introduce a level of certainty for Northwest pilots and their families,” he said. “Painful, but certain.”
Under the new contract, first-year Northwest pilots would earn about $27,000, up to about $159,000 for an experienced 747 captain. All the first-year pilots have been laid off, though.
Northwest has been pressing for $1.4 billion in annual labor savings from all its workers, saying it needs the cuts to reorganize successfully.
“Northwest pilots and their families have done all we can do to help secure our future. And now it’s time for others to step up to the plate and do the same thing — the other employee groups, the creditors, the vendors,” McClain said.
He called on Northwest not to “squander our significant sacrifices.” He said he had in mind the SimpliFares fare cap begun in early 2005 by Delta Air Lines Inc. just weeks after pilots there agreed to $1 billion in concessions.
Delta ended up filing for bankruptcy protection on Sept. 14, the same day as Northwest. Later this month Delta pilots are set to begin voting on another $280 million in concessions.
At Northwest, about 63 percent of Northwest’s 4,800 pilots voted to approve the pact. Some union leaders had publicly called on pilots to reject the contract and hold out for a better deal.
Northwest President and CEO Doug Steenland praised pilots for taking their second pay cut in two years.
“With today’s vote, our pilots and their families have made another significant sacrifice to help secure Northwest’s future,” he said in a prepared statement.
Besides saving the airline, pilots were motivated to accept concessions out of a fear for their pensions. They lose more than most workers if their pension is abandoned because the Pension Benefit Guaranty Corp. caps payouts. US Airways dumped its pension on the PBGC, and pilots at Delta agreed not to challenge that airline’s potential move to do the same thing.
In contrast, Northwest has promised to keep its pensions as long as the law is changed to allow it to spread out catch-up payments to its pension fund. Lawmakers have said they hope to send such a bill to President Bush by May 29.
Daniel Petree, dean of the business college at Embry-Riddle Aeronautical University and an expert on airline labor relations, said the pilot approval shows “that the rank and file are resigned to the fact that these are the economic realities, and this is what they more or less have to live with.”
Baggage handlers and flight attendants have issued strike threats, too, but Petree said those don’t carry the same weight as a strike threat from pilots, who must be certified on individual types of airplanes.
“It is easier to run an airline with replacement baggage handlers than it is with replacement pilots. So the other bargaining units have to ask themselves, what would be the impact on the airline were they to strike?” he said.
Pilots at feeder carrier Mesaba will also face some difficult choices soon. Northwest, which provides Mesaba’s planes and nearly all its revenue, wants to trim the feeder’s fleet to 49 propeller-driven Saab aircraft. And Mesaba is pressing for steep pay cuts from its workers, too.
Tom Wychor, head of the Mesaba branch of ALPA, said the airline won’t survive on 49 planes, and it won’t survive if pilots walk out rather than accept pay cuts. He said his own pay would drop 42 percent if Mesaba gets its way.
“I simply can’t do that. I can’t subject my family to that,” he said.