Tuesday, February 20, 2024


NWA bankruptcy hearings near end

Larger view
Pilots union leader Mark McClain accuses Northwest of "cherry picking" statistics to make excessive proposals appear commensurate with industry standards. (MPR Photo/Mark Zdechlik)
Northwest Airlines is expected to wrap up its arguments for the rejection of its pilots and flight attendants contracts on Friday. Attorneys for the two unions spent much of Thursday cross-examining one of Northwest's top finance officials, who earlier in the week told the court the airline is running out of money. Northwest maintains its asking no more than what's necessary to be competitive so to attract financing to emerge from Chapter 11 Bankruptcy. But the unions say Northwest is trying to use the bankruptcy court to gain excessive concessions from them. And the unions accuse the airline of manipulating statistics and misrepresenting other information to make their case.

New York, NY — Northwest Airlines used its time before bankruptcy Judge Allan Gropper to argue that it can't successfully reorganize without cutting its labor costs by $1.4 billion.

The airline called expert witnesses to the stand who testified that Northwest's labor costs are the highest in the industry. They also stated that Northwest's proposals to cut jobs, wages, and benefits and change work rules would leave the airline with lower labor costs than American, United, Delta and Continental Airlines.

But Northwest insisted to the court even then its labor costs would remain higher than those of the recently merged US Airways and America West, and several "low-cost" airlines.

Northwest made its case with urgency, telling the court the airline losing four to five million dollars a day. Northwest introduced testimony that without the labor cost reductions, it could lose $1.1 billion this year.

Airline officials testified that Northwest's cash reserves could drop to levels that could create problems with vendors and credit card companies and invite attacks on its market share from more health airlines.

Standing outside the court building, Northwest spokesman Bill Mellon said it's a difficult time for the airline and its employees, but that the course Northwest is pursuing is necessary.

"We strongly believe that if we can get our labor conditions, our labor costs under control, we can address balance sheet issues and take a look at a new fleet, resize the fleet, that we'll be in a good position long-term growth," he said.

While Northwest maintains its proposals are reasonable, the pilots and flight attendants disagree. They charge the airline is trying to exploit the bankruptcy process to gain big advantages over other similar airlines. They say Northwest is pushing for much greater concessions than it needs to be competitive.

Northwest based its overall labor cost targets on the labor cost structure of newly merged US Airways-America West. But Northwest pilots say the contract at US Airways- America West hasn't even been finalized. And because of that the union says Northwest is basing its finances on something that could change.

Pilots union leader Mark McClain accuses Northwest of "cherry picking" statistics to make excessive proposals appear commensurate with industry standards.

"They're trying to make a case that they're putting something out that's on par with their competitors but a fair and honest analysis shows that it's far below their competitors," according to McClain.

The flight attendants also contend Northwest is seeking excessive concessions. And under cross examination by a union attorney, a Northwest executive acknowledged even now Northwest flight attendants make less money than do flight attendants on the low-cost carrier Southwest Airlines.

But flight attendant's spokeswoman Karen Schultz says her union's biggest criticism of Northwest is that she says the airline has not negotiated in good-faith. She says her union's proposals have come extremely close to meeting Northwest's savings goals. But she says that still is not enough for the airline.

"It appears to us that the issue for the company is not just numbers; it appears to us that they're trying to bring in foreign workers to replace their American flight attendants," she said.

Northwest says its wants people who know the language and culture of its Asian customers on its important Pacific routes. And Northwest insists it has been working hard to reach agreements with both unions and that it would much prefer settling with the workers than having a court impose contracts on them.

The law requires Judge Gropper to rule on Northwest's request to reject its unions' contracts with in 30 days of the start of the trial last Tuesday.

Even as the trial continues, contract talks between the airline and the unions are ongoing. The pilots and flight attendants are threatening to strike if the judge imposes contracts on them that they feel go too far.

A Northwest official told the court the airline has no contingency plan for a pilots strike and predicted a sustained work stoppage would likely force Northwest to liquidate.