Flight attendants at Northwest Airlines Corp. asked a bankruptcy judge on Monday to reconsider pay cuts in light of the carrier’s improving fortunes.
U.S. Bankruptcy Judge Allan Gropper had allowed Northwest to cut flight attendant pay and change their work rules to save $195 million a year beginning July 31. He found that the carrier needed the concessions from flight attendants and other workers if it was to make money.
With those cuts in place, Northwest indeed made money during 2006, sort of. It reported a $301 million pretax profit if bankruptcy expenses are excluded. Including bankruptcy expenses, it lost $2.84 billion for the year.
In a bankruptcy court motion filed Monday, flight attendants argued that Northwest’s business plan, drafted in late 2005, proved overly pessimistic.
The motion said Northwest was on track to achieve a 6.5 percent pretax profit margin in 2007, instead of 2010 as its earlier plan expected. Falling oil prices and higher ticket prices have helped Northwest and other airlines over the past year.
Flight attendants also argued that worker concessions were based on the idea that creditors would lose money, too. But with bankruptcy claims trading for 86 cents on the dollar, creditor pain will be minimal, the flight attendants argued.
The flight attendants have proposed concessions they valued at $156 million a year, 20 percent less than Northwest wants.
They asked Gropper to rescind his permission for the imposed concessions but to delay the ruling’s effect for two weeks. If that two-week deadline fails to produce a deal, flight attendants proposed that Gropper restore them to their pre-bankruptcy contract.
Northwest officials said they expect the court to deny the motion.
“Northwest’s total labor cost savings target of $1.4 billion is a necessary component of its overall restructuring,” the company said in a prepared statement.
“The target was set to ensure that Northwest’s labor costs were competitive in the marketplace, and that the difficult sacrifices involved in wage and benefit reductions were shared equitably across all employee groups,” the Eagan-based airline said.
“Reduction of the target would require renegotiation of other ratified agreements, delay the overall restructuring and undermine the progress Northwest has achieved to date,” Northwest said.