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Northwest asks court to reject labor contracts

/ Source: The Associated Press

Northwest Airlines Corp. asked a federal bankruptcy court Wednesday to reject its existing labor contracts if it can't agree to new terms with its unions.

The move was expected as the company works through a bankruptcy financial restructuring.

The fourth biggest U.S. air carrier wants to cut $2.5 billion in costs, including $1.4 billion annually in labor costs.

Doug Steenland, the airline's president and chief executive officer, called the filing in U.S. Bankruptcy Court in New York a "backstop" to negotiations for consensual cuts.

The airline outlined new targets for union concessions in the filing, and said salaried and management employees would also take a second round of pay and benefit cuts soon.

Northwest mechanics, cleaners and custodians have been on strike since Aug. 20, although Northwest has kept flying without them. The last round of talks broke off on Sept. 11. Northwest filed for Chapter 11 bankruptcy three days later, freeing the company from the threat of creditors' lawsuits while it reorganizes its finances.

Northwest previously announced plans to reduce its flight schedule, and the airline expanded on that in the filing, describing it as "right-sizing the airline."

Northwest expects fourth-quarter mainline capacity to be cut 7 percent to 8 percent from the period a year ago, with domestic flights cut more sharply than overseas routes. More schedule reductions are planned starting in January, tentatively 11 percent to 13 percent of capacity compared to a year earlier.

The schedule may eventually be cut as much as 15 percent or more, Northwest said.