A bankruptcy judge said Thursday that Northwest Airlines Corp. can throw out its union contract with flight attendants if two more weeks of talks don’t produce a deal.
“We reserve the right to strike” if that happens, union spokeswoman Karen Schultz said.
The memorandum of law from U.S. Bankruptcy Judge Allan Gropper was a major victory for Northwest.
For the rank and file, the only bright spot was Gropper’s decision that Northwest could impose the terms rejected by an 80 percent vote of flight attendants earlier this month — not the harsher terms Northwest had offered earlier in negotiations, as the airline had wanted.
Gropper wrote that talks have gone on nearly long enough.
“Unless real progress is made in the negotiations, however, any additional delay would be inappropriate, as it would fail to recognize the Debtors financial plight and their need to move their Chapter 11 cases toward a conclusion,” he wrote.
Flight attendants and the airline met for just over an hour on Thursday but failed to reach a deal. Northwest has claimed the right to impose terms even without a judge’s order, and its promise not to do that was to expire on Friday.
Gropper ordered the airline to propose a formal order within three days, and it appeared that the two-week clock would not begin running until after that. In addition, flight attendants have promised to give 15-days notice of any plans to strike, pushing any potential strike back into early August. The airline has said a strike would be illegal.
Gropper urged the two sides to keep talking.
He said he was “requiring the parties to make one last effort to reach a ratifiable agreement. Nevertheless, it is clear that the process of negotiation cannot drag on indefinitely.”
The union said it has met the company’s demand for $195 million a year in cost savings through wage cuts and work-rule changes and other concessions. But the union has recently pushed to limit management bonuses, stock options “and other monetary excesses to protect our airline’s treasury,” according to a written statement issued after Gropper’s decision.
PFAA President Guy D. Meek said Northwest is “driving a larger wedge between management and loyal, hardworking employees. Nevertheless, given the judge’s order, we will continue to negotiate for these changes, in an attempt to bring reason to NWA’s board room.”
Mike Becker, Northwest’s senior vice president of human resources and labor relations, said Thursday the agreement the flight attendants rejected was the result of extensive negotiations involving substantial compromise on both sides.
Gary Chaison, an industrial relations expert at Clark University in Worcester, Mass., said Northwest has less leverage than it might appear, because of the union’s strike threat.
He said that just because Northwest has won the legal right to impose terms soon doesn’t make it a good idea. It could miscalculate on the seriousness of the union’s strike threat, or on the damage to employee morale by imposing terms.
“I hope they’re listening to their labor relations experts and not their lawyers in this one,” he said.
Northwest began seeking union concessions in 2003. It finally reached a tentative agreement with flight attendants March 1. Union leaders never endorsed it, saying they didn’t want to influence the vote of their members. Eighty percent of voting flight attendants rejected that agreement earlier this month.
Flight attendants are voting through July 6 on whether to affiliate with the Transport Workers Union, and at the same time they’re voting on whether to switch to the Association of Flight Attendants. The AFA said on Thursday it is prepared to jump into negotiations after the election if it wins.
Also Thursday, Gropper extended Eagan, Minn.-based Northwest’s deadline for filing its own bankruptcy reorganization plan before creditors can submit alternate proposals.
Gropper ruled that Northwest had made enough progress on its Chapter 11 restructuring plan to justify extending the deadline to Jan. 15. After that, creditors will have until March 16 to submit their responses.
This is the second extension for the nation’s fifth-largest airline. In January it asked to have the deadline pushed back to July 13.
Attorneys for both Northwest and its creditors, which did not contest the motion, said they were optimistic that at least the bulk of the case could be resolved by the new deadline.
“Your honor, I believe that we have achieved a number of milestones,” Northwest attorney Mark Ellenberg said, adding that the airline has worked to resolve issues with its labor unions and restructured most of its aircraft fleet.
“I think we’ve made excellent progress but there’s still a lot to do.”
The January deadline will mark 16 months in bankruptcy for the airline, which filed for Chapter 11 protection on Sept. 14.