"Pilots Union Agrees to Cuts at Northwest"

Friday, October 15, 2004

Pilots Union Agrees to Cuts at Northwest
By MICHELINE MAYNARD
The New York (NY) Times


Northwest Airlines and its pilots union reached tentative agreement
yesterday on a deal that would save the airline $300 million in labor costs.

Leaders of the Air Line Pilots Association, which represents pilots at
Northwest, will now decide whether to submit the two-year agreement to
members for a vote. The tentative settlement includes $265 million in cuts,
the first granted to the airline by any of its labor groups. It comes more
than a year after Northwest first sought the cuts.

As part of the deal, Northwest said, salaried employees will take cuts worth
$35 million. Before the tentative agreement can be carried out, Northwest
must renegotiate a $975 million credit arrangement, which expires a year
from now.

If that happens and the pilots ratify the deal, Northwest said, the labor
savings would take effect Dec. 1. 

Details on the cuts for employees were not available. 

The tentative agreement came less than two weeks after Northwest's chief
executive, Richard H. Anderson, resigned to join a health care company. His
successor, Douglas M. Steenland, Northwest's president, vowed to continue
the talks.

Northwest sought $950 million in concessions from its unions in the spring
of 2003, with a warning by Mr. Anderson that the airline might file for
Chapter 11 bankruptcy protection if it could not cut its costs. 

But analysts were skeptical that Northwest was in such dire need. 

Although Northwest has lost $2.1 billion since 2001, it has insulated itself
somewhat from the threat posed by low-fare airlines by focusing on its hubs
in Minneapolis, Detroit and Memphis, and on its Asian routes.

Mr. Anderson subsequently backed off his prediction. Earlier this year, the
pilots union said it would be willing to accept a deal worth $200 million.
Talks accelerated last weekend before ending with yesterday's tentative
agreement.

Northwest said it would continue discussions with the International
Association of Machinists and Aerospace Workers and the Transport Workers
Union of America. Northwest said it hoped to open talks soon with flight
attendants, mechanics and other employees.

A federal bankruptcy court judge, meanwhile, is set to hear more arguments
today on a request by US Airways to cut its union members' pay 23 percent.
US Airways has said it could be forced to liquidate by midwinter if the cuts
are not approved.

The request, which has been the subject of two court hearings thus far, is
opposed by the unions at US Airways, which say the airline has not proved it
needs such deep cuts.

US Airways filed for its second bankruptcy in two years on Sept. 12, after
workers refused its bid for $800 million in wage and benefit cuts. Those
would have been their third round of concessions. Two were granted in the
first bankruptcy.

Yesterday, US Airways won court approval for an agreement with its lenders
and a federal loan board that will permit it to continue to draw from its
cash to run its operations.


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