Eagan, Minn. — Unions at Northwest Airlines face an intimidating deadline. A hearing in two weeks in Northwest's New York bankruptcy courtroom could start a 30-day clock, after which the judge could throw out the labor contracts and put new terms in place.
The unions say Northwest approached them with a deal: agree to temporary, immediate cuts now, and Northwest will put off its request to toss your contracts. All the unions, with the exception of the striking mechanics, would have to commit to such an arrangement for the deal to materialize.
Except for the mechanics' union, the flight attendants have been most skeptical about Northwest's proposed cuts, but they stepped forward first. Guy Meek, president of the Professional Flight Attendants Association, delivered news of a "brutal" proposal in a recorded message to members.
"We fully realize the devastating effect this will have on us all. However we are certain you must agree that accepting this temporary cut is a necessary risk when facing other, drastic, unknown possibilities left open by inaction," he said.
The proposal approved by the union board has not been formally accepted by Northwest yet. But the union says the temporary cuts are based on a goal set by the airline. They deliver 60 percent of what Northwest says it needs from the union on a permanent basis. Northwest had requested cost cuts totaling $195 million a year from the union.
The central feature of the interim plan is a pay cut for flight attendants of 20 to 25 percent. Extra pay for flying internationally and serving as a flight purser would be reduced. Per diem allowances for flight attendants between flights and away from home would also shrink.
The proposal does not include the most contentious change Northwest wants: the outsourcing of flight attendant work on some international and domestic flights. Union board member Peter Fiske says that's an issue flight attendants would negotiate with the airline during the extra 60 days the temporary cuts could buy.
"With the monumental amount of issues we're dealing with -- outsourcing and other things in our agreement -- there simply wasn't the view that we wanted to take the view of all that being left in the hands of a bankruptcy judge," according to Fiske.
In a statement Northwest said it is discussing temporary savings arrangements with its three biggest unions, but did not specifically acknowledge the proposal submitted by flight attendants. The company has said it is losing $4 million a day and is trying to cut its labor costs by $1.4 billion in bankruptcy.
Officials with the union representing baggage handlers, gate agents, and other groundworkers are out of town and did not return calls for comment. Leaders of the Northwest pilots' union have been considering a package of cuts at a meeting this week.
Doug McKeen, a former vice president of labor relations at Northwest and now an airline industry consultant, says temporary labor savings deals mean the bankruptcy process might be less contentious than some had expected. While the airline needs deep cuts, McKeen says it will be better for the long-term health of the company if employees have a role in determining their own destiny.
"The ultimate outcome that's most effective is one in which everyone is going in the same direction," McKeen said. "You get a cost structure that's effective, and a world where employees recognize that they've had a say."
McKeen says there are tough issues ahead, including the outsourcing of flight attendant work, but extra time will give the union a chance to pitch alternative ways to save money.
While agreeing on cuts is better than a mandate from a bankruptcy judge, McKeen says it's a matter of degree. The process of getting costs down at a deeply troubled company is "always difficult, in any circumstance."