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Northwest Airlines Released From Mediation

Northwest Airlines confirmed today that the National Mediation Board (NMB) has
released the airline from mediated talks with The Aircraft Mechanics Fraternal
Association (AMFA) union.Under terms of the federal Railway Labor Act, a thirty-day “cooling off”
period has begun. It is planned that both parties will continue labor
negotiations with the goal of reaching a new agreement in advance of a 12:01
a.m. EDT, August 20, 2005 deadline.
  “Northwest Airlines wants to continue to work with AMFA negotiators to
reach a consensual agreement that provides wage and benefit levels that are
fair to our employees while allowing Northwest to stem its record operating
losses,” said Andrew C. Roberts, executive vice president-operations.
  “Northwest Airlines believes that an end to NMB mediation was necessary so
that a deadline could be established.”
  “While Northwest wants to reach an expedited agreement with AMFA, whatever
the outcome of negotiations during the next 30 days, Northwest customers can
continue to depend on Northwest to meet their travel needs. In preparation for
any possible job action, the airline has developed comprehensive contingency
plans, including expanded vendor relationships and the augmentation of airline
staff, to ensure that Northwest continues to operate reliably and is able to
fly its full schedule,” Roberts said.
  Earlier this year, Northwest announced that at least $1.1 billion in
annual labor costs savings was necessary for the airline to restructure
successfully. AMFA’s share of this total is $176 million annually.
  AMFA’s current proposal offers potential cost reductions of only $87
million on a temporary basis. The union’s offer calls for only two years of
reductions, with wage rates snapping back to 2005 levels in 2007, regardless
of market conditions.
  As the result of labor agreements at its major competitors as well as
lower labor costs structures at so-called “low cost carriers,” Northwest
Airlines now has the highest labor costs in the industry. “It is imperative
that we reach a concessionary labor agreement with AMFA this year. Failure to
achieve the needed $176 million in savings from AMFA will leave the airline at
increased financial risk,” Roberts added.
  Northwest remains in federal mediation with The International Association
of Machinists and Aerospace Workers (IAM) and The Professional Flight
Attendants Association (PFAA). In addition, it is continuing contract
negotiations with representatives of its other unions.