A bankruptcy court on Tuesday approved nearly $550 million in concessions between Northwest Airlines Corp. and two of its unions representing pilots, baggage handlers and ground workers.
The concessionary contract from the pilots union calls for $358 million in givebacks, while Northwest, the No. 5 U.S. carrier, will save $190 million annually with the new pacts with 12,200 baggage and ground workers.
Judge Allan Gropper of the Southern District of New York accepted the separate motions at a court hearing, leaving the Professional Flight Attendants Association, which represents 9,300 flight attendants, alone among the airline’s unions without a new package of concessions.
“The motions clearly represent settlements and agreements that are reasonable and that should be approved by the court,” Gropper said. “The court also recognizes that the motions embody concessions on the part of the unions and their members that are extremely painful.”
Northwest spokesman Kurt Ebenhoch called the court approval “another positive step in our restructuring process.”
Still, Eagan, Minn.-based Northwest must have a new contract in place with flight attendants before it will begin to reap the savings of the pilot and ground worker contracts approved Tuesday. That’s because each major union negotiated a “me-too” clause that keeps their own concessions from going into effect until they all do.
Eighty percent of voting flight attendants rejected a proposed contract with Northwest last week that would have saved the company $195 million. Northwest had said it wanted to impose its terms as soon as possible, but it failed to win permission for that from Gropper.
Instead, the airline and the union are set to meet on Wednesday, and Northwest has promised not to impose terms on flight attendants until at least June 30. Flight attendants, meanwhile, agreed not to strike until at least 15 days after Northwest imposes terms.
“At least it give us the status quo breathing room to negotiate without having to have those two issues in the forefront,” PFAA President Guy Meek said.
The judge commended the two sides for the temporary agreement that averts a flight attendant strike.
“I will certainly be pleased to enter this order,” he said. “I commend the parties for being able to agree on a way forward in the immediate future.”
The company’s concessions deal with baggage handlers and ground workers cuts wages 11.5 percent and allows Northwest to lay off roughly 700 workers. The IAM has said Northwest once sought to lay off as many as 3,100 of its members.
“Our members were faced with a difficult decision to approve some very painful cuts that will require a sudden loss of jobs and changes for everybody involved, but they did that to avoid an even worse fate, if the contract was abrogated by the court,” IAM spokesman Joe Tiberi said.
The five-year deal allows Northwest to outsource some ground work such as baggage handling and equipment operating at stations with few flights, although the carrier agreed to keep IAM workers at the 40 airports where it has the most flights. It allows Northwest to outsource food catering and loosens rules about part-time workers.
Pilots accepted a 24 percent pay cut under the agreement.