MPR: Northwest announces benefits for laid-off workers

Northwest announces benefits for laid-off workers
By Andrew Haeg
Minnesota Public Radio
September 27, 2001

Northwest Airlines says it will give thousands of recently laid-off workers a relief package that includes severance pay. The move came on a day when the state Legislature was considering aid for the state's embattled airline industry.

Northwest Airlines CEO Richard Anderson testifies Wednesday before a legislative commission considering state aid for the beleaguered airline, and its workers.
(MPR Photo/Andrew Haeg)

When Northwest announced last week it would cut its workforce by 10,000 - including 4,500 in Minnesota - it was unclear how many of the job cuts would be involuntary. On Wednesday the company revealed it achieved 3,500 job reductions through voluntary leaves of absence, retirements, and attrition. That left 5,500 workers who are actually being laid off, and now Northwest says it will give them up to six weeks pay, depending on years of service.

Additionally, all will receive full medical and travel benefits through the end of the year.

Only a day earlier, Northwest had said it wouldn't provide any severance pay. But the airline appeared to have a change of heart as worry mounted that Northwest's cuts would put a tremendous strain on government resources.

Department of Economic Security Commissioner Earl Wilson said the relief package will take some of the stress off the state's unemployment insurance fund. "That helps the system too, because it doesn't take the immediate drain on the trust fund, and in of phases in the workload as far as the processing the claims goes. So it's good from that standpoint too. But even better, from the employee's standpoint, because a severance package is at least as generous and usually more so than an unemployment insurance check," Wilson said.

Besides the union workers losing their jobs, 1,000 Northwest management employees are being laid off.

Northwest CEO Richard Anderson joined Sun Country Airlines' chief executive and the executive director of the Metropolitan Airports Commission in telling lawmakers about the airline industry's dire straits, and to set the stage for potential state aid to the industry. They addressed the newly formed legislative committee chaired by Deanna Wiener, DFL-Eagan.

Wiener, whose district contains the headquarters of both Northwest and Sun Country, said the whole state had to pull together to deal with the crisis caused by the terror attacks in New York and Washington.

"This is not about Democratic politics, this is not about Republican politics, this is not about Independent politics. This is nothing about me, this is about we. This is about Minnesota, this is about our economy, and knowing who we are, we are not going to fail," she said.

Lawmakers on the committee seemed poised to complement the federal government's $15 billion airline bailout package with a plan of their own. But none has yet made any specific proposals.

Northwest CEO Richard Anderson said he wasn't asking for the state's help. But he reiterated that the fate of Northwest and the fate of Minnesota are, to an extent, inextricably linked.

"On that basis," he said, "I thought it appropriate for us to lay out to you what the serious challenges are that we face . And that over time as the situation develops, we can work together, keep you informed and make a determination of what an appropriate action would be if any."

Mike Erickson is one of the Northwest employees looking forward to assistance from the company. He's been an aircraft dispatcher for two years. His last day with the company is October 10th.
(MPR Photo/Tim Pugmire)

On another topic, Anderson said the airline will negotiate with the Metropolitan Airports Commission over $5.5 million in dues the airline has so far refused to pay.

Sun Country Airlines, on the other hand, made a series of specific and sweeping requests to the committee. CEO David Banmiller asked lawmakers to pay unemployment insurance benefits for the 100 employees it plans to lay off. He asked that the state put more money toward its dislocated workers program. And he asked that the state provide direct grants, loans and loan guarantees to the airline.

"We recognize that with all these requests, we are asking for some unconventional measures. But these are unconventional times. In my my 30-plus years in the airline industry, I have never experienced such difficulty or complexity. We ask that you at least entertain some of these new possibilities that do not come in the form of a direct subsidy," Banmiller said.

Banmiller said the airline expected to lose up to $21 million in the fourth quarter.

Finally, Metropolitan Airports Commission Executive Director Jeff Hamiel told legislators that despite deep budget cuts, the MAC may not be able to sustain itself without some government support.

The Senate committee will meet again next week to discuss how much help the state should give to the airline industry, if any.

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