The last holdout union at Northwest Airlines Corp. tentatively agreed to deep pay cuts and work rule changes Monday, bringing the bankrupt carrier closer to the labor savings it sought for three years.
The agreement came on the same day Northwest could have imposed the contract rejected by 80 percent of flight attendants last month. The Association of Flight Attendants had threatened job actions including a possible strike if that happened.
Details of the agreement weren’t released, but Northwest said it got the $195 million in annual savings it sought.
Union leaders and rank-and-file flight attendants would have to approve the deal for it to take effect. Northwest said it expects the voting to end on July 31. Approval would mean Northwest could also implement new contracts already approved by pilots and ground workers.
The vote followed an intense round of negotiations that only began after July 6, when flight attendants dumped their old union to join the AFA. The AFA had promised to fight for a better contract than the one flight attendants rejected in June.
At the same time, Northwest won major leverage when a bankruptcy judge gave it permission to impose terms on flight attendants on Monday.
“It was down to the wire, and we made some improvements, and we just hope they’re good enough” for union members to approve, said Sean Fivecoat, secretary-treasurer for the Northwest branch of the AFA.
“With the airline in bankruptcy, this deal was always going to be about survival,” said Mollie Reiley, interim president of the Northwest branch of the union.
“We left no stone unturned and we have made a significant difference together, but this is not a day that we celebrate. We have an agreement that will give flight attendants hope for the future and one that allows us to fight another day.”
If flight attendants approve it, the tentative agreement would end Northwest’s push for labor savings that began in 2003 and eventually totaled $1.4 billion.
“We are pleased to have reached this tentative agreement that achieves the required $195 million in annual cost savings from our flight attendants,” said Northwest President and Chief Executive Doug Steenland.
The heavily unionized carrier faced tough resistance from workers. Mechanics struck in August, and Northwest imposed a new contract on those who crossed the picket line. But the only pre-bankruptcy agreement it won was from pilots.
Baggage handlers rejected one agreement before approving another one that includes pay cuts and hundreds of layoffs. Pilots saw their pay plunge almost 40 percent. The rejected deal with flight attendants included a 21 percent hourly pay cut — and the number was closer to 40 percent when higher health insurance premiums and other concessions were factored in, their previous union said.
“They hung tough with all the unions, and I think they’ve won,” said Aaron J. Gellman, professor at Northwestern University’s Transportation Center.
Creditors, which include Airbus, General Electric Co. and U.S. Bancorp as well as some of the unions, will view the agreement as a step toward getting out of bankruptcy, he said.
The agreement “seems to be a major step forward for Northwest. It brings them a lot closer to getting out of Chapter 11, and I think that is good for the company and the remaining employees.”