Wednesday, July 18, 2018
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Northwest presses its cost-cutting plan as bankruptcy trial begins

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The U.S. Bankruptcy Court building in New York, where the Northwest Airlines' bankruptcy trial began Tuesday. (MPR Photo/Mark Zdechlik)
A bankruptcy court proceeding that could lead to a judge imposing wage and job cuts on Northwest Airlines' pilots and flight attendants continues for a second day Wednesday in New York. Meanwhile, airline and union negotiators are still trying to reach contract agreements outside of the courtroom. Tuesday, lawyers for Northwest began laying out in detail the airline's case for dramatic wage and job cuts for the two big unions.

New York, N.Y. — During opening statements Tuesday, Northwest Airlines' attorney told bankruptcy judge Allan Gropper the cost savings Northwest is seeking are necessary if Northwest is to have any hope of successfully emerging from bankruptcy. The company says it has lost $4 billion since 2001.

But in their opening remarks, attorneys for the pilots and flight attendants argued Northwest is seeking to gain a significant advantage in the airline industry by exploiting the bankruptcy process.

The pilots' attorney, Richard Seltzer, told the judge many of the numbers Northwest is using in court overstate the cost of its pilots compared to other airlines.

The attorney for the flight attendants' union, Lee Seham, told the court Northwest has treated that union like "second-class" citizens in  negotiations. 

The flight attendants told the court Northwest has failed to  provide them with  relevant economic data, and that the airline has embarked on a "take it or leave it" approach, in violation of its obligation to negotiate in good faith.

Northwest maintains it has negotiated in good faith, and says it will continue to lose significant amounts of money this year even if it gets the cost cuts it wants.

As Northwest and the unions laid out their positions in court, negotiators for the airline and the workers continued trying to reach agreement on wage and job cuts at a New York hotel.

At the beginning of the trial, Judge Gropper said he was pleased Northwest and its largest union, the International Association of Machinists -- which represents groundworkers -- reached a proposed settlement over the weekend.  Gropper expressed hope the pilots and flight attendants would also be able to reach accords.  Gropper told all of the attorneys he has no doubt the negotiators for both sides can do a better job working out contracts than he can. 

Among those watching in the packed courtroom were nearly two dozen members of the pilot union's leadership group --- all of them dressed in Northwest uniforms.

During a break, the head of the pilot's union, Mark McClain, said the judge's remarks regarding negotiations may help ease tensions that stand in the way of progress.

"The judge obviously has a very good grasp of these proceedings and understands collective bargaining -- that in bargaining situations the two parties are best suited to reach a  mutual, consensual agreement -- and he seems to want that to happen," said McClain.

Following the lengthy opening arguments, Northwest began what could be three days of detailed testimony from expert witnesses helping the company make its case for cost cuts.

One testified that Northwest's labor costs per seat mile flown are the highest in the industry, and that its proposed cuts would bring those costs below most carriers with similar operations -- but not below the level of low-cost airlines such as Southwest.

In cross-examination, attorneys for the unions raised questions about the methodology used by Northwest's expert witness.  Northwest's witness acknowledged some of the statics were from airlines which are no longer in business.

At the close of the first day of the trial, flight attendants' spokeswoman Karen Schultz says she was pleased with the points made in the cross-examination of Northwest's expert.

"I think our legal team really picked it apart pretty effectively. There was some fuzzy math going on in there," said Schultz.

Following Northwest's presentations, the unions will have their own expert witnesses explain why they think Northwest's proposals are excessive.

The pilot's attorney told the judge if he imposes a contract which fails to address the powerful union's concerns, Northwest can expect a strike.

An attorney for Northwest said the airline would seek a formal determination from the judge to prevent a walkout, which it claims would be illegal.

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