Sat, Nov 06, 2004
$265 million concession package ratified, includes 15 percent
pay cut
The NorthWest airlines chapter of
the Air Line Pilots Association has ratified an agreement granting
the airline a $265 million concession package that includes 15
percent pay cuts. The agreement will expire on December 31, 2006,
and received 89.1 percent of the votes from the rank and file. The
management and other non-contract employees of the airline will
also contribute $35 million, consisting of pay cuts and changes to
benefit packages. In total, the airline will see some $300 million
in annual savings.
The airline was asking for $950 million in labor savings, but so
far only $300 million has been agreed to. As with most other major
airlines, NorthWest has been hit hard by soaring fuel costs and
low-fare competition. "We recognized that this agreement alone
won't solve Northwest's problems, but it will let them overcome
some near-term hurdles," said Hal Myers, a Northwest pilot and
union spokesman to Reuters.
The deal does not become effective
immediately, but rather on the first day of the month following the
airline's successful restructuring of its revolving credit
facility, said Myers. In return, the pilots will receive 3.5
million options for stock plus additional profit sharing
participation.
The airline has been fighting a losing battle against fuel
costs. The strategy of adding surcharges to ticket prices to offset
rising fuel prices has apparently not worked. In a statement, the
company said that "In light of current economic and competitive
issues facing Northwest, the airline's overall labor cost reduction
goal of $950 million in annual savings remains unchanged. The
long-term outlook for Northwest Airlines remains strong, assuming
we are able to achieve competitive labor cost agreements."
Still on the table are talks with the airline's machinists and
aerospace workers unions, as well as transport workers, mechanics,
flight attendants, meterologists and other union employees. In
October, Northwest reported losses of $46 million in the third
quarter.
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