Northwest disappointed by union decision

7th Jun 2006

Northwest Airlines is disappointed that its flight attendants, represented by the Professional Flight Attendants Association (PFAA), have failed to ratify a tentative contract agreement reached in early March between the company and the union.“The tentative agreement was a product of extensive negotiations involving substantial compromise on the part of Northwest Airlines and PFAA’s negotiating committee. Northwest bargained in good faith with representatives of PFAA and addressed flight attendant concerns on issues including international flight staffing, furloughs and pensions,” said Mike Becker, senior vice president of human resources and labor relations.
“We reached a consensual agreement with the union’s negotiating committee whom the flight attendants chose to represent them. Importantly, that agreement held out the best hope for preserving flight attendant jobs,” Becker continued.
Notwithstanding the results of the flight attendants’ contract vote, Northwest must continue to move forward with its restructuring efforts in light of ongoing losses, persistent record-high fuel costs and the urgent need to realize $1.4 billion in annual labor cost savings.
Accordingly, Northwest has asked the U.S. Bankruptcy Court for the Southern District of New York to rule on the company’s Section 1113(c) motion to reject the existing flight attendant labor agreement and permit Northwest to impose new contract terms.
The trial on Northwest’s Section 1113(c) motion began in Bankruptcy Court on Jan. 17 and ended on Feb. 3.  The two parties announced a tentative agreement on March 1, after the close of the record, but prior to a court ruling on Northwest’s motion. Today’s action requests that Judge Allan L. Gropper rule on the Northwest motion as soon as possible so that the airline can take necessary actions to stem its losses.  For the first quarter of 2006, Northwest reported a net loss of $129 million, excluding extraordinary items.
Northwest also announced that it is filing a motion with the Bankruptcy Court asking for a preliminary injunction to prevent a threatened strike by PFAA. Northwest has repeatedly stated that a work stoppage by its flight attendants is unlawful under the Railway Labor Act which governs airline labor issues.
“We are taking this action to reassure our customers that they can continue to book Northwest with confidence for their future travel needs,” Becker added.
“We are asking the court for a speedy ruling on our contract abrogation request because the airline’s losses are continuing. While temporary labor cost savings approved by the court last November are helping Northwest, today’s PFAA vote further delays implementing permanent labor cost reductions, which will result in ongoing losses of $30 million per month,” Becker said.
To date, Northwest has reached agreements on permanent wage and benefit reduction agreements with the Air Line Pilots Association (ALPA), Aircraft Technical Support Association (ATSA), the Transport Workers Union of America (TWU), and the Northwest Airlines Meteorologists Association (NAMA). Also, the airline’s International Association of Machinists and Aerospace Workers (IAM)-represented customer service and reservations staff employees ratified a new contract.  Two rounds of salaried and management employee pay and benefit cuts have also been implemented and the needed aircraft maintenance employee labor cost savings has been achieved. Last month, the airline and the IAM agreed on a contract proposal for the airline’s equipment service and stock clerk employees. The IAM is currently completing a ratification vote.
Since beginning its restructuring process in September of last year, Northwest has remained focused on its plan to realize $2.5 billion in annual business improvements in order to return the company to profitability on a sustained basis. The restructuring plan continues to be centered on three goals: resizing and optimization of the airline’s fleet to better serve Northwest’s markets; realizing competitive labor and non-labor costs; and restructuring and recapitalization of the airline’s balance sheet.


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